The State bank of India, the country’s largest bank, has been given permission by the People’s Bank of China, China’s apex bank to lend in yuan, the local currency from March 15, 2010. The State Bank of India which set up operations in China about 10 years ago, has become the first Indian bank to gain the approval, a coveted achievement, considering the rigorous qualification process.
Signaling the strengthening economic ties between the two nations, Mr. Sasikumar, Chief Representative, SBI in Shanghai 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.
The bank currently has a branch office in Shanghai and a representative office in Tianjin, north-east of Beijing. As part of their expansion plans, SBI hopes to upgrade their Tianjin office to a branch and is looking at opening another branch in the Pearl River Delta, where a majority of Indian traders operate. According to PBOC regulations, a foreign bank has to oprate as a representative office in China for more than three years before it can gain permission to open a branch office.