Chinese banks are set to enter India with a financial services pact likely to be inked between the two countries during Premier Wen Jiabao’s December 15-17 visit.
Almost 400 businessmen will accompany Wen during his trip — his second state visit to India. China is all set to become India’s largest trading partner in goods this year, with bilateral trade staying on course for US$-60 billion target. The country is also keen on initiating a free trade pact with India. New Delhi is eyeing Chinese investment for infrastructure projects worth US$ 1 trillion.
Gautam Bambawale, joint secretary, East Asia division that deals with China in the ministry of external affairs said the two countries are likely to sign a financial services agreement.
There are 10 Indian banks such as the SBI, in China. At present, there are no banks from China operating in India. The only bank, which has commercial presence in China and is operating in India, is Taiwan’s Chinatrust Commercial Bank.
China’s "big four" government-owned commercial banks — Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China and the Agricultural Bank of China —could be among the ones that are likely to be allowed to start commercial operations in India. China’s ambassador to India, Zhang Yan, said on Monday he hoped the Industrial and Commercial Bank of China would be given permission to operate in India.
Last year, RBI’s Committee on Financial Sector Assessment (CFSA) had recommended that opening of the banking space to foreign players should be based on "reciprocity". In other words, the CFSA report suggested India open its doors for banks of those countries which have allowed Indian banks to set up branches.
MEA spokesperson Vishnu Prakash termed the visit a "very important state visit", and said New Delhi seeks greater cooperation with China for its infrastructure.