The ICICI Bank, India's largest consumer lender, on Thursday launched commercial operations in Sri Lanka, with an eye on the growing bilateral trade and inward remittances market.
The bank opened its first branch in the metropolitan area centred in Colombo and has invested $5 million as seed capital, officials said.
It needs to top up extra capital to reach $25 million by end of 2007 to keep in line with the island's Central Bank capital requirements.
"Bringing extra capital is not a problem for us because we are very bullish on Sri Lanka and here for the long-haul," ICIC Bank's managing director and CEO K V Kamath told reporters on Thursday.
Country head for Sri Lanka, Naveen K Agarwal, said the bank would tap into a growing base of Indian corporate clients and Sri Lankan companies doing business with Indian firms.
Trade between India and Sri Lanka has grown to around $2 billion since a free trade pact was signed in 2000.
Indians residing in Sri Lanka also send back around $100 million each year.
Sri Lanka has 11 domestic banks, of which two state banks -- Bank of Ceylon and People's Bank -- dominate the landscape accounting for about half of the country's banking assets.
ICICI Bank currently has subsidiaries in Canada, Britain, and Russia and offshore units in Singapore, Hong Kong and Bahrain. It has representative offices in the United States, China, the United Arab Emirates, Bangladesh and South Africa.