State Bank of Mauritius's India unit to open 6 new branches.

State Bank of Mauritius (SBM) Group has received Reserve Bank of India’s approval to operate in India through a wholly-owned subsidiary route. SBM is the first foreign bank in India to obtain a WOS Licence from the Reserve Bank of India. The bank will soon operate as a banking subsidiary of SBM Group in India under the name of SBM Bank (India) Ltd. This new structure will provide more leeway for SBM in its branch expansion strategy.

Established in 1994 in India, SBM currently operates four branches, namely located in Mumbai, Chennai, Hyderabad and Ramachandrapuram. To capture a wider market and increase its customer base, SBM plans to launch six new branches in Delhi, Bangalore, Kolkata, Pune, Ahmedabad and Jaipur by next year. The bank offers a diverse suite of products and services in the Indian market including deposits, advances, NRI Services, treasury products and trade finance services. It plans to revamp its customer base and solutions offering in line with its growth strategy.

Besides establishing a robust domestic franchise in India, SBM expects to capitalize on its geographic network in East Africa and the Indian Ocean region to add value to customers. It is reckoned that there is growing interest in trade and investment along the India-Africa corridor, where SBM can play an important role in financing and structuring.

“One of the reasons for SBM to start its international footprint in India is because of the strong links that exist between these two countries with around three-quarters of the Mauritian population being of Indian origin. This is a focused effort by SBM to grow its cross-border banking business and widen physical presence in geographies with untapped growth potential for better customer reach. With domestic expansion programme, SBM will continue to grow outside Mauritius.” - Mr Moses Harding John, CEO, India & East Africa, SBM Holdings Ltd.

As per Wholly Owned Subsidiary rules by RBI, the initial minimum paid-up voting equity capital for a WOS shall be Rs. 5 billion. The newly set up WOS of the foreign bank would be required to bring in the entire amount of initial capital upfront, which should be funded by free foreign exchange remittance from its parent. The CEO would be appointed on a full-time basis and should be resident in India. All notifications regarding Basel III have to be followed. RBI also states that at least 25% of branch network should be in Rural areas, this may be on the outskirts of tier 2 city or near State Industrial Zones.

Singapore’s DBS Bank is another lender which is awaiting final approval from the RBI to convert its 12 branches into a wholly owned subsidiary.