Domestic banks, after climbing the great wall of China, have now set sights on Malaysia. Recently Bank of Baroda opened a representative office in Malaysia. Indian Overseas Bank and Kolkata-based UCO Bank are expected to follow suit.
S C Gupta, CMD, IOB, said, "With increasing number of joint ventures between Malaysian and Indian companies, there are opportunities that banks can leverage there especially in the infrastructure sector. We will be opening our representative office in Malaysia in six months for which we have applied to the Reserve Bank of India for a licence."
Senior officials from BOB said that setting up a representative office would be the first step towards opening a branch in a country. It helps the bank to study the potential and viability of opening a new branch.
Representative office provide information and liaison requirements of Malaysian and Indian businesses for furthering trade and synergies between the two countries.
Bank Negara Malaysia, the central bank of Malaysia had hiked up the capital investment for foreign banks to set up a new branch from RM 25 million (Rs 30 crore) to RM 300 million (Rs 360 crore) a year ago.
There are 37 licensed commercial banks in Malaysia that operate through a total of 1,340 branches while representative offices have been established by 37 foreign banks.
State Bank of India, Canara Bank, ICICI Bank and BOB have representative offices in China. IOB had recently got the licence from the RBI to open a representative office in Chine while Vijaya Bank plans to do the same.
Prior to the nationalisation in July1969, banks such as UCO Bank, Indian Bank and IOB had couple of branches in Malaysia. The branches of these banks were forced to close down after nationalisation as the then prevailing law in Malaysia prevented working of foreign government-owned banks.
