India to open banking sector for China

While Beijing is expected to push for early start of negotiations on a Sino-Indian Free Trade Agreement, New Delhi is likely to seek greater market access for India Inc in China to lessen the growing trade imbalance. 

The Industrial and Commercial Bank of China may be the first Chinese bank to open branch in India. The ICBC is one of the four big state-owned commercial banks of China. It is also the world’s largest bank in terms of profit and market capitalisation.

Beijing has long been complaining about absence of any Chinese bank in India, whereas several Indian banks already have presence in the communist country.

“There are already more than 10 Indian banks operating in China, but so far no Chinese bank operates in India. I hope very soon the ICBC will open its branch in India,” said the Chinese envoy to India, Zhang Yang. He was addressing a conference organised by the Federation of Indian Chamber of Commerce and Industries here on Monday.

Gautam Bambawale, Joint Secretary (East Asia) in the Ministry of External Affairs, said that although several Indian banks had presence in China, only some of them had been able to set up branches, while others just had representative offices. He said that Indian banks found it difficult to operate in China due to the stringent regulations in the neighbouring country.

Highly-placed sources said  New Delhi would ask Beijing to ease its regulations to facilitate the Indian banks start full scale business in China. The two countries might also ink a financial services agreement, particularly to augment cooperation in the banking sector.

Concern

The State Bank of India  had earlier expressed concern over the implications on its business in the aftermath of the ICBC’s foray into the country. Significantly, the ICBC is also set to start its operation in Pakistan soon.

Wen is arriving in New Delhi on Wednesday for his second state visit to India. He will be accompanied a 400-member business delegation.

Indicating that bilateral trade and economic relations will be under focus during the visit of Wen, Zhang said that China and India should start “the process of negotiation on Regional Trade Arrangement or if possible a Free Trade Agreement” that would protect the interests of the business people of the two countries.