The State Bank of India became the seventh bank to open an International Banking Unit at the GIFT City campus after it conducted the first transaction of two million dollars (over Rs 13 crore) Monday. The chairman of the bank, Arundhati Bhattacharya, said the new IBU of the bank at the country’s first International Financial Services Centre (IFSC) in Gandhinagar will initially deal with External Commercial Borrowings (ECBs) and trade credit for Indian corporates.
“Today we have launched our 199th international branch, but the difference is that it is being done in the country and in an SEZ… Initially we are looking at Indian corporates who need to avail either trade credit or other sorts of loans in foreign currency. Subsequently we will include all kinds of other transactions as well as derivative transactions,” said Bhattacharya after formally inaugurating the IBU along with the CEO of GIFT City, Ajay Pandey.
The function was held at the IFSC after the SBI chairperson laid the foundation stone for a commercial tower in the domestic tariff area of the project.
According to the SBI official, a capital of $20 million (about Rs 133 crore) has initially been given to the IBU that has started operations with five employees.
“Indian corporates will need trade credit , i.e importers and exporters they will need buyers credit. That will be done out of here. Today we have done a buyer’s credit for two million dollars in respect of an exporter from Vietnam and an importer from India. Similarly, ECBs (External Commercial Borrowings) for Indian corporates will also be done out of GIFT,” she added.
Presently, the IBUs in GIFT City operated by Yes Bank, ICICI Bank, Federal Bank, IDBI Bank, IndusInd Bank and Kotak Bank have together done a business of over $700 million. There are about 15 more banks that are in queue to set up their respective IBUs.
Stating that both Dubai in the west and Singapore in east have “benefitted” due to the absence of a IFSC in India, she said, “Most of the investment happening in India goes through Singapore. Not only that if there are disputes in India between two Indian clients, the arbitration is being done in Singapore by Indian lawyers and in Indian law… If you go to IFSC in Dubai or in Singapore, most of the people handling investments, legal matters or back office operations, are Indian expats…”
The SBI chief also said that India can easily accommodate two IFSCs – in Gandhinagar and in Mumbai. “There can be scope for two, because India is aiming to grow exponentially and if we really are going to become a very major economy by 2020 or 2050 there is scope for more than one,” Bhattacharya said.
Meanwhile, a senior official of the bank said the SBI will next open branch in Yangon, Myanmar on October 3.