KARACHI, July 18: Yet another local bank, MCB Bank is seeking to open branches in India and has requested for permission from the State Bank of Pakistan.
Two years back National Bank of Pakistan and United Bank Limited were given permission by State Bank to open their branches in the main cities of India, but the arrangement was not materialised because of diplomatic hitches between the two neighbouring countries.
The two governments had decided that the arrangement would only become operational on reciprocal basis, but New Delhi has yet to send the names of two Indian banks willing to open branches in Pakistan, hence there has been no progress in the case of NBP and UBL.
When contacted MCB Bank spokesman said a request had been submitted to the State Bank in January, but no positive response had so far been received.
Banking sources said MCB Bank may not get permission unless the NBP and UBL cases are not resolved with help of Indian government.
“It is useless to grant permission to another bank for opening of branches in India while already two Pakistani banks have been waiting for years to get positive response from India,” said a senior banker.
When contacted the State Bank spokesman refused to comment on the request of the MCB Bank for permission to open branches in India.
Pakistani banks have strong desires to enter into the financial sector of India but they are not getting encouraging response from the Indian government, whereas Indian business community has shown keen interest to enter manufacturing sector.
India is making all-out efforts to improve its trade ties with Pakistan while the bilateral trade relation has significantly improved during the last three years, but mostly in Indian favour.
According to the State Bank data, the bilateral trade volume rose to $1.454 billion in the first 11 months of 2011-12 but mostly in the favour of India as Pakistan exported goods worth $310 million and imported goods of $1.144 billion during this period.
India being second largest economy in Asia after China is searching for new markets to sell its low cost products before China enters and grabs the maximum share.
China has already entered the markets and financial sectors of Pakistan. Industrial and Commercial Bank of China Ltd (ICBC) has started operation with two branches one each in Karachi and Islamabad. The ICBC is the world’s biggest bank by capitalisation.
Recently financial sector sources said the Bank of China (BOC) is also initiated to enter Pakistan which would certainly increase presence of the Chinese financial giants in Pakistan.
Trade volume of the two countries increased but much in favor of China as Pakistan exported goods worth $1.847 billion and imported goods of $3.857 billion during the first 11 months of 2011-12.
National Bank has already opened its branch in China. Also Pakistan has entered into a currency swap agreement with China that is equal to $1 billion which could be helpful to improve the bilateral trade volume.