Buoyed by good performance of its first branch in Shanghai, State Bank of India (SBI) Tuesday opened its second branch in China in the port city of Tianjin, reputed to be a major international business hub.
Tianjin, (China): Buoyed by good performance of its first branch in Shanghai, State Bank of India (SBI) Tuesday opened its second branch in China in the port city of Tianjin, reputed to be a major international business hub.
The Tianjin branch was inaugurated by Minister of State for Finance Namo Narain Meena in the presence of top Chinese officials of the city.
"Tianjin branch of SBI will take advantage of the growing trade and economic co-operation between the two countries. The strategic and economic importance of Tianjin is unmatched," Meena said while speaking at inagural function here.
About seven Indian banks have representative offices in different cities in China, while four, including SBI, have opened up their branches to take advantage of the burgeoning India-China bilateral trade, which touched all time high of USD 73.9 billion in 2011.
It, however, declined to USD 66.47 billion in 2012.
Though the balance of trade tilted heavily in favour of China (USD 28.87 billion), Indian banks which mostly cash in on Line of Credit and financing of export-import businesses, are showing interest in opening branches as they seek to leverage business from both Indian and Chinese firms.
Meena said: "Many Indian banks have established a presence in mainland China. Foreign bank licencing policy is gradual in China, and all these banks are at various stages of establishing their operations. It is hoped that other Indian banks that have fulfilled conditions set for foreign banks in mainland China, also graduate to opening branch operations at an early date."
"Majority of the India-China trade is based on commodities, and, more critically, on imports of capital goods and services related to India's infrastructure sector. SBI's presence in Tianjin will enable it to facilitate such trade transactions," he said.
Chinese banks have also showed interest in expanding in India.
"Similar to the expansion initiative of SBI, Chinese banks, such as the Industrial and Commercial Bank of China (ICBC), have also been looking forward to establish their presence in India," Meena said adding that this is a clear testimony to the growing importance of bilateral and economic relations between the two countries.
Indian Ambassador to China, S Jaishankar said: "We expect trade to recover and reach the USD 100 billion by 2015 agreed upon by the two governments. Apart from trade, India is also the largest market for project exports from China," he said.
Currently, projects under execution are estimated at over USD 55 billion, he said.
"There is a significant complementarity between the Indian and Chinese economies. The infrastructure deficit in India, in particular, is expected to drive Chinese exports while also attracting its investments," Jaishankar said.
"It (Tianjin) is emerging as an attractive location for Indian companies in China, both in trade and services. We have always enjoyed very positive cooperation from authorities," he said.
"We are at a stage when a number of Chinese companies are showing strong interest in establishing a more sustainable presence in India. On our part, the quest for improved market access in China continues. I have no doubt that our export basket will also diversify in times to come," he said.
In this background, expanded banking relations between India and China are very important, he said.
"We have 10 Indian banks in this country, with different levels of operations. The Reserve Bank of India and China Banking Regulatory Commission (CBRC) have already reached agreement to expedite processing of licences.
"We see more interest on the part of Chinese banks in going to India. It is only when our banks are more connected that we can be said to have achieved the full spectrum relationship that is natural to neighbours," he said.
SBI Managing Director Hemant G Contractor told the media on the sidelines of the function that SBI branch in Shanghai has shown around 20 percent profitability prompting his bank to open its 51st overseas branch in Tianjin.
He said Chinese Banks also wants to expand operations in India. While ICBC, which has a branch in Mumbai wants to open its second branch in New Delhi, Bank Of China has applied for permission to open branch in Mumbai.
According to the licence, the Tianjin branch is permitted to operate 300 Yuan freely convertible currency. The branch is authorised to transact business within the scope of foreign exchange, including attracting savings from public, short and medium loans, trading of bonds, LC guarantee, safe deposit box service.
SBI opened its representative office in Shanghai in 1997 and later upgraded it as full-fledged branch in 2006.