SBI, first Indian bank in China

State Bank of India has become the first Indian bank to start commercial operations in China, confident of tapping and aiding the booming trade and commercial linkages between the two Asian giants.

"We are now in a position to offer one-stop solutions to the Indian business community's specific banking requirements and can offer tailor-made solutions," chief executive officer of SBI-Shanghai Branch, T C A Ranganathan said in Shanghai.

The SBI Shanghai branch had completed computerisation and uplinking the system to its headquarters in India last Thursday, he said.

According to the Chinese banking regulations, SBI Shanghai can offer banking services only to foreigners or foreign enterprises in foreign currency.

Indians living in China would be able to send money back home faster and at costs much lower than they had been paying now, Ranganathan said at the soft-launch of the commercial operations, which was attended by the Consul General of India in Shanghai, Vishnu Prakash and other members of the Indian community.

"We are trying to negotiate the service charges so that clients can get favourable rates. We have tied up with leading Chinese bank, the Industrial Commercial Bank of China and are in discussions with others," Ranganathan said.

In 2005, bilateral two-way trade rose to $18.7 billion, up 37.5 per cent over 2004. If this trend continues, in 2006, the two-way trade, will surpass that in 2005 to $20 billion, official sources said.

SBI, India's largest bank with 65 offices in 32 countries spanning all time zones, had established its representative office at Shanghai in 1997 and obtained clearance from the Reserve Bank of India in 2002 to upgrade the China office into a branch.

In 2003, SBI filed preliminary application to China Banking Regulatory Commission for license to upgrade the RO into a branch. In 2004, it received preliminary clearance from CBRC to apply for license.

Though the SBI could have applied for regular banking operations in China two years after setting up the RO, it apparently waited till Beijing became a full-fledged member of the World Trade Organisation in 2001 so as to benefit from the relaxed entry norms.

Under the terms of China's WTO entry, the country is bound to open up its entire banking system to foreign competition by end of 2006.

Ranganathan said the SBI received approval from CBRC in 2005 and filed application for onsite inspection to CBRC, Shanghai.

The SBI Shanghai branch will also facilitate investment into China and also to facilitate international trade transactions, he said.

The bank can now provide loans and advances or syndications, including project loans and syndicated loans, working capital loans and term loans, credit verifications, advisory and consultancy services and loans for exporters and importers.

On the trade finance front, the SBI Shanghai branch will provide documentary collections/discounting, opening/amendments/advising/confirmation of Letter of Credits, handling of import bills and bank guarantees.

The bank is also eligible to perform money market and treasury operations under which it could engage in money market dealings, trading in forex, forex dealing brokerage, domestic and international settlement.

The bank can also handle inwards and outwards remittances, accounts for individual/corporate/institutional accounts and provide safe custody services.

The SBI Shanghai branch would also provide real-time transactions with its network linked with the main/central server at Belapur, Mumbai.

The computerisation work of the SBI Shanghai branch was undertaken by Infosys.

The bank has also recruited local Chinese staff and training and orientation programmes are proceeding well so as to acclimatise them to SBI working style.

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