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Pakistans wealthiest businessman is seeking to expand his banking group into India, in a further sign of a thaw in the often troubled relations between the neighbouring nuclear-armed south Asian states.
The move follows a period in which the two countries have begun a number of initiatives to liberalise trade, including in the banking sector. It also comes after the April visit to India of Asif Ali Zardari, Pakistans president, the first in close to a decade, and follows moves to allow Pakistani businesses to make foreign direct investments into India.
Both governments have focused on improved economic ties as a means to improve a relationship that has frequently been marred by armed conflict and terrorism, most recently following the 2008 attacks in Mumbai by Pakistani militants.
Mian Mohammad Mansha, owner of the Nishat business group, one of Pakistans largest conglomerates, told the Financial Times in an interview that his group had been the first to apply to open branches in India, following recent rule changes.
Our major rationale is that India is a very profitable market, said Mr Mansha, whose assets include the high-profile Muslim Commercial Bank. We have asked the state bank [Pakistans central bank] for permission to open three branches [in India] to begin with. The opportunities are endless.
If successful, MCB will become the first Pakistani bank to open branches in India in the 65 years since the two countries became independent from Britain in 1947. To open branches Mr Mansha must first win permission from both nations central banks.
In a further sign of improved relations, the body governing Indian cricket announced on Monday that it would invite Pakistans national side to play a series of matches in the country later this year.
The potential tour would be the first between the worlds largest cricket-playing nations since 2007. Cricketing ties between the two were suspended in the aftermath of the Mumbai attacks.
The combination of thawing cultural and business ties have raised hopes among business leaders that India and Pakistan could in time become each others largest economic partners, despite posting bilateral trade of only $2.7bn during 2010-11.
The Confederation of Indian Industry, a trade body, said earlier this year that this figure could increase to about $10bn by 2015, if barriers including restrictive visa and cross-border permit regimes are reformed. The two nations have set a more modest target of $6bn over the same period.
In the banking sector, Mr Mansha says any potential opening up in India will help Pakistans banks move into a market where the returns are higher than in their own country. Foreign banks are raking in money in India and that is not the same in Pakistan, he said.
However, independent experts warn that progress may be slow. I would not be too optimistic, says Neelam Deo, a former Indian ambassador and now a director at Gateway House, a Mumbai-based foreign affairs think-tank.
Intelligence agencies would be wary of cross border banks being used as a channel for illegal activities, she said. I would be surprised if something as sensitive as financial institutions are opened up quickly, although it might happen in time.
Pakistani tycoon targets India banking - FT.com
