India allows Bank of China to open office in Mumbai
The 106-year-old Bank of China is all set to become the second Chinese bank after the Industrial and Commercial Bank of China Ltd to have a branch in India. On Wednesday, the Reserve Bank of India issued a license to the Bank of China — a formality that was pending for the last three years. The decision to allow the Bank of China to operate out of India was taken last month during a meeting between Chinese President Xi Jinping and Prime Minister Narendra Modi on the sidelines of the SCO summit, Sputnik reported.
Apart from the Bank of China, three banks from Iran, two from South Korea, one from Malaysia and one from the Netherlands had also applied for the license. Among the Iranian banks that had sought approval from the RBI were Bank Pasargad, Parsian Bank and Saman Bank. RBI has not issued a license to these applicants to date.
India's security agencies, until June this year, had not granted security clearance to the Bank of China amid speculations that the People's Liberation Army had an indirect stake or control over the bank. Some unconfirmed reports also pointed out that the bank was involved in funding Hamas, a terror group which targets Israel. However, the listing documents showed the bank to be partly owned by Central Hujin Investment, Hong Kong Exchanges Clearances, and China Securities Finance.
China had permitted Indian banks to open seven branches in China since 2006. The State Bank of India was the first to start operations in China where it has two branches. The Bank of India, the Bank of Baroda, Canara Bank, ICICI Bank and Axis Bank have one branch each. With Chinese investments in India growing manifold in recent years, Chinese banks have been seeking the license to operate in India.
Last year, bilateral trade between both countries touched a historic high of $84.44 billion, and in the first quarter of this year it witnessed robust growth, netting $22.1 billion, a 15.4 percent year-on-year increase.