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NEW DELHI: State Bank of India can look forward to crossing the border 47 years after it had to shut its branches in Karachi and Lahore in the wake of the India-Pakistan war.
The troubled neighbours are set to allow banks from both sides to open branches in each other's territory amid a renewed attempt at reviving relations. The two central banks - Reserve Bank of India and State Bank of Pakistan - are readying to invite applications from interested commercial banks, following a meeting of their officials earlier this month when they sorted out most prickly issues.
These included the high capitalisation requirement for banks in Pakistan, which Indian lenders find steep, an official privy to the talks told ET, adding that a joint announcement can come as early as next month during the meeting of the commerce secretaries.
"There were some differences on the financial parameters for eligibility of banks as the Pakistani side had kept capitalisation norms too high. But the requirement has been scaled down now and the norms have been finalised," the official said. The two sides have also reached an agreement on the licensing fees that banks will have to pay, the official added.
The modalities will now be circulated to banks, which will then put in applications depending on the feasibility of the proposal.
Public sector banks State Bank of India and Bank of India had their branches in Karachi and Lahore till 1965, when India and Pakistan went to war for five weeks and all cross-border banking operations had to be suspended between the neighbours.
State Bank of India and Bank of India approached the State Bank of Pakistan in September 2008 seeking permission to start branches again, but got discouraged due to the high capitalisation requirement.
The recent meeting of officials of the two central banks followed the meeting between Indian and Pakistani commerce ministers in New Delhi on April 13, where they announced their intent to fast-track opening of bank branches to boost trade.
India, Pakistan to allow each other's banks to set up branches across the border - The Economic Times
The troubled neighbours are set to allow banks from both sides to open branches in each other's territory amid a renewed attempt at reviving relations. The two central banks - Reserve Bank of India and State Bank of Pakistan - are readying to invite applications from interested commercial banks, following a meeting of their officials earlier this month when they sorted out most prickly issues.
These included the high capitalisation requirement for banks in Pakistan, which Indian lenders find steep, an official privy to the talks told ET, adding that a joint announcement can come as early as next month during the meeting of the commerce secretaries.
"There were some differences on the financial parameters for eligibility of banks as the Pakistani side had kept capitalisation norms too high. But the requirement has been scaled down now and the norms have been finalised," the official said. The two sides have also reached an agreement on the licensing fees that banks will have to pay, the official added.
The modalities will now be circulated to banks, which will then put in applications depending on the feasibility of the proposal.
Public sector banks State Bank of India and Bank of India had their branches in Karachi and Lahore till 1965, when India and Pakistan went to war for five weeks and all cross-border banking operations had to be suspended between the neighbours.
State Bank of India and Bank of India approached the State Bank of Pakistan in September 2008 seeking permission to start branches again, but got discouraged due to the high capitalisation requirement.
The recent meeting of officials of the two central banks followed the meeting between Indian and Pakistani commerce ministers in New Delhi on April 13, where they announced their intent to fast-track opening of bank branches to boost trade.
India, Pakistan to allow each other's banks to set up branches across the border - The Economic Times
Large competition between banks in Pakistan....
