Swiss banking major UBS has started to wind down its banking operations in India with the intention to exit all banking activities in the country,say sources.
The bank has decided to shut down its commercial banking business and has nearly completed the winding down of its commercial loan book,confirmed sources within the foreign lender. The move may be a precursor to UBS returning its banking licence to the Reserve Bank of India. It could not be verified whether the licence has already formally been returned.
The decision to exit banking in India may be partly linked to a broader global move driven by stricter capital requirements that been brought in as part of Basel III norms, explained a senior banker. These norms have forced a number of foreign banks to curtail their operations in markets like India and also pare down investments in Indian companies. However,UBS would be one of the first to look at a complete exit from the banking business in India. UBS Securities,which has a separate investment banking licence issued by Sebi,will remain operational.
UBS first decided to ramp up its commercial banking business in late 2010 when it started to actively lend to large corporates. The business,however,failed to generate adequate returns and prompted the decision to exit.