India, Pak put trust in banks | india | Hindustan Times
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India, Pak put trust in banks

india Updated: Oct 09, 2006 01:10 IST
New Delhi

PAKISTAN'S LARGEST private sector bank, Habib Bank, whose controlling stake is held by the Aga Khan, may not be allowed to start a branch in India following 'some concerns' expressed by security agencies. However, the National Bank of Pakistan (NBP), which is wholly Pakistan government-owned, will be allowed.
The Aga Khan, based in Geneva, is a revered figure, the 49th Imam of the Shia Imami Ismaili Muslims.

"For various reasons we are uncomfortable about allowing Habib Bank to set up its branch in Mumbai," said a senior finance ministry official, who wished not to be identified. But he refused to detail the security concerns.

New Delhi may request Islamabad to propose an alternative bank that can be allowed to operate in India as part of the bilateral understanding reached between the two banking regulators -- the Reserve Bank of India (RBI) and the State Bank of Pakistan (SBP). Both sides agreed to allow two banks from each country to set up branches in the other. Despite the seesawing of Indian and Pakistani diplomatic relations, following the Mumbai and other blasts this year, steps towards reciprocal banking in each other's countries, have been steadily taken.

India is likely to request Pakistan to propose the name of an alternative bank during the Secretary-level talks in New Delhi next month.

Similarly, India's largest bank, State Bank of India (SBI) and the state-owned Punjab National Bank (PNB) have also sought approval from the Reserve Bank of India (RBI) and State Bank of Pakistan to set up branches in Pakistan.