ICBC Opens Mumbai Branch, Eyes Growing India-China Trade.

Industrial and Commercial Bank of China Ltd (ICBC), the world’s largest lender by market value, opened for business in Mumbai on Thursday, hoping to tap the growing bilateral trade between India and China and to help Chinese infrastructure companies raise funds in one of the world’s fastest growing economies.

ICBC president Yang Kaisheng said rising Sino-Indian trade and India’s economic performance in the past few years attracted the bank to the country.

“Trade between India and China is growing rapidly at 40% year-on-year and was at $60 billion (`2.87 trillion today) last year,” Yang said. “We would like to facilitate trade and economics between the two countries.”

ICBC has a market capitalization of $219.5 billion and reported a profit of 166.025 billion yuan (around `1.233 trillion) in 2010.

Initially, the bank will concentrate on lending to large companies in India.

“Corporate banking is the first stage. In future, gradually we will add private banking, personal banking and investment banking,” said Sun Xiang, chief executive of ICBC in India.

The bank applied for a licence in India in April 2010. Subsequently, a memorandum of understanding between the Reserve Bank of India (RBI) and the China Banking Regulatory Commission in December paved the way for Chinese banks in India.

RBI officially approved ICBC’s licence in May, making it the first bank from mainland China to open a branch in India.

India’s top public sector banks—State Bank of India​ (SBI), Bank of India, Bank of Baroda​ and Canara Bank—all have branches in China.

Robin Roy, associate director of financial services at PricewaterhouseCoopers (PwC), said Chinese companies are bullish on India’s economic prospects, so it’s natural for banks to follow them.

“They will service companies here, but the more interesting thing will be to see whether they adapt to a subsidiary route whenever the RBI opens the sector,” Roy said.

In a discussion paper released in January, RBI suggested widening the role of foreign banks in the Indian banking system, saying it will “incentivize” them to operate as wholly owned subsidiaries in India.

Once made a rule, new overseas entrants in the Indian banking space will have to incorporate themselves locally. Existing players will be encouraged to incorporate locally as well and function as subsidiaries of their foreign parents, RBI said.

Yang said if local regulations change, ICBC will comply. “We have come to India to follow our corporate clients. We have clients in the local industrial, power, telecom and infrastructure sectors. Also, we are ready to provide yuan bonds for corporate clients. Yuan can be used for settlement of cross-border trade,” he said.

ICBC counts among its clients Chinese telecom equipment companies Huawei Technologies Co. Ltd, ZTE Corp. and power generation equipment maker Shanghai Electric Group Co. Ltd.

Reliance Industries Ltd​ is also one of its 4.12 million corporate clients, according to a company brochure.

PwC’s Roy said ICBC may not look at retail banking in India soon. “They already have a huge amount of branches and individual customers in China,” he said.

ICBC has 16,227 branches in China and is looking at expanding in emerging markets, Xiang said. ICBC is present in 30 countries.

Source : livemint.com