China’s largest bank, the Industrial and Commercial Bank of China has been granted a business license by India’s Central Bank, the Reserve Bank of India to set up a branch office in Mumbai. Inchin Closer was the first to report on this development more than a year ago.
ICBC’s entry into the financial heart of the worlds third largest economy, strengthens bilateral financial ties between the world’s biggest emerging economies. Earlier in the year, four Chinese companies had participated in the campus placement project at IIM-C (Kolkata) to hire finance majors for analytical jobs in Mainland China. The middle kingdom, growing at a staggering rate is in need of finance majors as supply lags behind demand.
The entry into India, will not only allow Indian companies to borrow liberally from Chinese banks which are flush with funds, but will also escalate business for Chinese companies in India. In addition, it will give the yuan as a common currency of bilateral trade between China and India a further push.
ICBC plans to increase its global footprint by setting up new branches in countries such as Brazil, India and Pakistan, and generating 10 percent of its assets and profits from overseas by 2016, its chairman said in April.
ICBC’s entry also comes more than a year after India’s State Bank of India was permitted to trade in yuan. At the time, Inchin Closer interviewed Mr. Sasikumar, Chief Representative, SBI in Shanghai, who told Inchin Closer “our being able to lend in Yuan will greatly benefit Indian companies as most of them have corporate relationships in India with SBI” Indian company’s borrow roughly 700 million yuan from Chinese banks for their operations in the mainland, SBI is now hoping to capture a majority of this pie. SBI lending rates will be linked to the PBOC lending rates based on the risk assessment of the borrower, Sasikumar added.