RBI lets 2 Singapore banks open account in India

The deadlock on the Comprehensive Economic Cooperation Agreement (CECA) signed between India and Singapore has finally lifted. The Reserve Bank of India (RBI) on Tuesday granted licences to two Singapore banks - DBS and United Overseas Bank (UOB). In turn, the Monetary Authority of Singapore (MAS) has approved a full bank licence to State Bank of India (SBI) with privileges to establish up to 25 outlets, including ATM's and offer full range of financial services. This makes SBI the first Indian bank to get a qualifying full bank (QFB) status in Singapore. The licence will enable the country’s largest bank to kick off retail operations in Singapore. DBS, Singapore’s largest bank, has received RBI clearance to open another eight branches in the country. UOB has received the RBI nod for opening its maiden branch in the country in Mumbai. According to the CECA which was signed in 2005 between India and Singapore, both countries are supposed to give QFB status to three banks from each country. Among other things, the agreement was aimed at tiding over the standoff between the two countries over entry into their respective financial services markets. Earlier, India had refused to acknowledge Temasek and GIC’s holdings in ICICI Bank as two separate entities since they were both controlled by the Singapore government. However, last year, RBI softened its stand on this issue last year allowing the two investors to hold higher stakes. Currently, SBI has only one branch in Singapore and does not have any access to retail deposits. The QFB status will also help the bank to raise retail deposits and also open 25 ATMs and point of sale terminals. Other banks like Bank of Baroda and Bank of India have also applied for a QFB licence while ICICI Bank is in advanced stages of applying for a licence.