UBS, the Swiss banking giant, has finally received the Reserve Bank of India (RBI) approval for full-fledged retail banking operations.
More than a year after applying, and some rumpus later...
MUMBAI: UBS, the Swiss banking giant, has finally received the Reserve Bank of India (RBI) approval for full-fledged retail banking operations, more than a year after it applied for one.
“UBS has been cleared (to open branches). We had given them the licence, but had to hold it because some transactions had to be clarified. Now they have been cleared and can go ahead with the branch,” V Leeladhar, RBI deputy governor in charge of banking regulation and supervision, said in the sidelines of a press conference here.
Big foreign banks like UBS, which have some presence in India, are keen to start retail operations in the world’s second fastest growing economy, lured by business opportunities from a young and increasingly wealthy population.
UBS already has a broking and investment banking unit in India, but the retail banking licence will give it a much better foothold.
An RBI official confirmed that the Swiss bank had applied for and received a licence for retail banking in India in 2007. However, the RBI held back the final nod seeking some clarifications.
In December last year, reports said that the UBS was facing investigations from regulatory and tax authorities in India over money-laundering.
A Pune-based stud farm owner is said to have transferred money across the globe through UBS. The investigations not only put UBS’ retail banking plans on hold, but it also forced UK-based Standard Chartered to abandon the sale of its seven-year-old Indian mutual fund business to the Swiss bank, which was the highest bidder.
UBS was keen to enter the mutual fund business in the booming Indian stock market, while Standard Chartered wanted to sell its only asset management business in the world as it shifted focus to services like private banking.
However, Standard Chartered is still looking for a buyer of its asset management business.
Leeladhar said that the central bank is still going through responses on its paper for holding companies in banks.
“We have some very good responses from the stakeholders regarding holding companies but there is no time-frame,” he said.
On August 27, 2007, the RBI came out with a paper on holding company models in the banking sector to “assess their suitability” in the Indian context.
Leeladhar also said that Indian banks are well on track to meet the Basel II requirements on capital adequacy by March-end.
Indian banks with branches abroad and foreign banks in India have time till next month-end to comply with the norms.
Other banks can do so by March 2009.
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