The Reserve Bank of India had granted the license to the bank to operate in India in June 2018. Both countries are working towards increased economic cooperation as India is a member state of the Shanghai Cooperation Organisation.
New Delhi (Sputnik): The 106-year-old Bank of China (BoC) has become the second Chinese bank, after the Industrial and Commercial Bank of China Limited, to have a branch in India as it opened its first Indian branch in the financial hub city of Mumbai on Tuesday. The Reserve Bank of India last June had issued the bank requisite license to operate in India after Indian Prime Minister had made commitments along these lines during his meeting with Chinese President Xi Jinping on the sidelines of the Shanghai Cooperation Organisation (SCO) summit.
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“It is another landmark for China-India financial cooperation and a huge boost for bilateral relations,” Luo Zhaohui, Chinese Ambassador to India said after attending the opening ceremony of the bank together with Chen Siqing, Chairman of Bank of China.
On the opening day itself, the Bank of China inked a pact with State Bank of India — country’s largest bank — to enhance business synergies between both banks, allowing them to gain direct access to their respective markets of operation. Chen Siqing, chairman of BoC, said the agreement would facilitate the growth of Chinese corporates operating in India.
“India is increasingly making its global presence felt across various landscapes. Partnering with an organisation like SBI is strategically important to us, and we look forward to contributing to SBI’s growth through our market expertise and established relationships,” the BoC chairman said.
The State Bank of India was the first to start operations in China while in following years Beijing had granted licenses to Bank of India, Bank of Baroda, Canara Bank, ICICI Bank and Axis Bank to operate in China. Financial experts opine that the opening of the Chinese bank branch in India’s financial capital will make life easier for investors and traders.
“As Chinese interests in India growing at a much faster rate, this will help definitely boost the bilateral investments. Traders who wanted to deal in national currencies will also find it very useful,” Rajiv Singh, CEO of stockbroking firm Karvy told Sputnik.
“The State Bank of India has over 190 international branches that could be used by the Bank of China to service Chinese corporates while the State Bank of India will get to expand its footprint in China,” Rajiv Singh added.
The bilateral trade between India and China had touched the $94 billion mark last year even though trade balance still favours China that has a balance surplus of around $75 billion. China has been making huge investments in the Indian technology firms, mobile manufacturing and startups for the past few years. According to a KMPG report released earlier this year, Chinese companies had invested nearly $2 billion in Indian startups during 2017 alone.
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The Bank of China, the world’s third largest bank in terms of capital, had applied for license in 2015. But Indian agencies had refused to grant security clearance amid speculations that the People’s Liberation Army had an indirect stake in the bank and hence has some degree of control over the bank. Some unconfirmed reports also pointed out that the bank was involved in funding Hamas, a terror group which targets Israel. However, the listing documents showed that the bank was partly owned by Central Hujin Investment, Hong Kong Exchanges Clearances, and China Securities Finance.