SBI gets nod to start retail operations in Singapore

India's largest bank by assets under management, State Bank of India (SBI), today received approval to offer a full range of services in the city-state of Singapore. The Monetary Authority of Singapore (MAS) today approved a qualified full banking licence (QFB) to SBI with privileges to establish up to 25 outlets, including Automated Teller Machines (ATMs) and offer full range of financial services, for which the application had been filed six months earlier.

SBI currently has a branch office in Singapore that provides a range of services include trade finance, corporate loans and deposits, and remittances. However, retail services like deposits and ATMs were not allowed prior to this approval. In fact, some of the other Indian banks that are present in Singapore - Bank of India, the Indian Overseas Bank, Bank of Baroda, UCO Bank, ICICI Bank and Axis Bank - do not offer retail services. Bank of Baroda and Bank of India have applied for QFB while ICICI Bank is in advanced stages of applying for one.

This gesture by the Singapore regulatory authority came as a quid pro quo to the Reserve Bank of India (RBI) on Tuesday grating licences to two Singapore banks - DBS and United Overseas Bank (UOB) to open additional branches in India. While DBS, Singapore's largest bank, has had a presence in India since 1995 and had opened its second branch in 2005, this is going to be the first venture for UOB on Indian shores. With this approval, DBS can open eight additional branches in Kolkata, Bengaluru, Chennai, Moradabad, Nashik, Pune, Salem and Surat, to add to its two existing ones in New Delhi and Mumbai.

These reciprocal gestures marked a loosening of the deadlock on the Comprehensive Economic Cooperation Agreement (CECA) signed between India and Singapore in 2005. Under CECA, the two countries agreed to give full banking licences to three banks from either side. Although RBI had been quite liberal with its approvals, MAS had been somewhat restrained citing adverse prudential norms of Indian banks. Hopefully, all that is about to change with the full-fledged entry of SBI on Singapore shores.