State Bank of India gets Chinese nod to lend in yuan

The State Bank of India has got permission from the Chinese authorities to lend in the local currency, the yuan--becoming the first Indian bank to get such permission from the Communist country.
     
With this, the Indian companies operating in China, which borrow about 700 million renminbi or yuan could gain access to about a billion yuan, (about USD200 million) from the SBI without depending on the local banks, SBI chief executive for China CR Sasikumar told PTI here from Shanghai.

The permission is for SBI's Shanghai branch, he added.

"By virtue of doing business with top Indian businesses back home we know them very well. So from now SBI which is dealing in foreign currency only here, could give them credit in the local currency," he said.
    
SBI deputy general manager for overseas expansion and planning Naresh Malhotra said in Mumbai that the bank expects to start lending in the yuan from March 15. "With this approval, our Chinese operations are getting into a different level as we were dealing in mainly the US dollar so far," Malhotra said.
     
With a view to support its growth in the region, SBI has so far invested around USD 45 million in China, Malhotra said.
     
Terming the permission as a major gesture from China, which is very cautious in allowing foreign banks, Sasikumar said the banks had applied for the permission last May.

The Chinese permission would also enable SBI to target local businesses with whom it is already dealing with in foreign currency operations. "We will begin targeting them from the second year," Sasikumar said.
     
Besides a branch in Shanghai, SBI has a representative office in the port town of Tianjin and hopes to upgrade it into a branch. That aprat, the bank is also planning to open a branch in Guangzhou and in the Pearl Delta where a number of Indian companies operate.

Besides SBI, Bank of Baroda, Bank of India and Canara Bank have their branches in China, while several others have representative offices.

The biggest Chinese bank Industrial and Commercial Bank of China is plannig to open its representative office in India along with Bank of China.
 
At presently, SBI has 142 outlets abroad, which include over 64 branches under five subsidiaries--Nepal (32 branches), Mauritius (12), California (7) and Canada (7) and Indonesia (6 branches).

SBI currently derives 13-14 per cent of its revenue from overseas operations and has targeted to take it to 20% over the next few years, Malhotra said.

Yesterday, SBI chairman OP Bhatt had said the bank planned to launch a string of retail products in its Canada, and British branches, which, it had alredy experimented successfully in Singapore. Bhatt had also said the bank was planning to change its British centre as a major hub for its European business.