State Bank of Mauritius (SBM) is gearing up to set up a wholly-owned subsidiary (WOS) in India. This launch will make SBM the first foreign bank to establish a subsidiary in India, which is one of the largest markets in the world. This will also help the bank increase its customer base and gain a solid position in the industry.
SBM is yet to receive the final approval from the Reserve Bank of India (RBI). However, the initial approval has already been obtained by the bank, and it is making preparations for its subsidiary launch. The bank has hired senior executives in India to proceed with the launch. It will then infuse more capital into the country and proceed with the final launch process.
According to SBM India CEO Siby Sebastian, the bank will set up about 30 to 40 branches over the next five years and will operate as per the guidelines established by the RBI. He also added that this is the best time for the bank to invest in India as the market is likely to expand in the future.
In November 2013, RBI provided the approval for foreign banks to establish wholly-owned subsidiaries. As per the RBI guidelines, foreign banks can operate in India either in branch mode or in WOS mode. For banks setting up subsidiaries in India, RBI has promised near-national treatment. By establishing a subsidiary, SBM aims to build a strong business presence in India.
SBM is one of the only two banks to have received RBI approval to operate as a subsidiary. A few weeks back, Singapore-based DBS Bank received Reserve Bank approval for the same purpose.