The Singapore government will give national status to Indian banks setting up operations in that country. This will enable Indian banks to access the retail market in Singapore on a par with local banks.
"With national status accorded to Indian banks setting up shop in Singapore, they will be able to access retail business," said Tharman Shanmugaratnam, the deputy chairman of the Monetary Authority of Singapore.
The Singapore Stock Exchange is also pushing for linkages with the National Stock Exchange and the Bombay Stock Exchange. This will facilitate retail investors in Singapore to invest in the Indian capital market.
Shanmugaratnam, who is also the minister for education, was speaking at the session on financing growth in India, on the second day of the third Pravasi Bharatiya Divas in Mumbai.
Many Indian banks have sought to enhance their overseas presence, but are facing bottlenecks in terms of regulatory issues. The government of Singapore hopes the bilateral agreement, the Comprehensive Economic Corporation Agreement, signed between India and Singapore, will ease the problems.
The CEO of a public sector bank pointed out today that while foreign banks wanted to increase their footprint in India, Indian banks were unable to operate in developed countries such as France, the UK or the US.
"East Asian banks are quite open, but only towards banks from the West, not Indian banks," he said.
The Reserve Bank of India, too, had earlier argued that foreign banks in India enjoyed greater freedom and operational profitability in the country than Indian banks moving overseas.
The SSE, through talks with the BSE and NSE, is trying to facilitate bilateral investments between retail investors in Singapore and India. The SSE has already tied up with the Australian Stock Exchange and wants to replicate the model in India.
The idea is when capital account convertibility becomes a reality in India, Indian retail investors can invest in Singapore stocks. Today, they face several restrictions despite the partial opening up of the sector.
For instance, they are allowed to invest up to $25,000 a year abroad. "While the Indian government is investing abroad, retail Indian investors are not," said Shanmugaratnam.
A new status
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