Indian Bank is planning to expand its operations in Singapore by using its newly launched Asian Currency Unit (ACU).
A report in the Today newspaper quoted the public sector Indian Bank's chairman and chief executive Kamalesh Chandra Chakrabarty as saying that the bank would leverage its ACU, launched last month, to expand its international operations hub in this city-state.
The ACU in Singapore is an operational unit within a bank that can accept deposits and extend loans in any other currency other than in Singapore dollars. Though it is part of the larger licensed bank, it has to maintain a separate account under Monetary Authority of Singapore rules.
"Singapore has established itself in the world arena as a financial centre and we want to leverage that advantage and do more business through the ACU. In our scheme of things today, it's very important," Chakrabarty told the newspaper.
Indian Bank, which has been operating in Singapore since 1941, holds a foreign full banking licence in the country. The licence allows the bank to deal in Singapore dollars. The other Indian banks to hold this licence are Bank of India (BoI), Uco Bank and Indian Overseas Bank (IOB).
Chennai-headquartered Indian Bank is the second bank after BoI to launch an ACU.
According to Chakrabarty, since the statutory reserves requirement for a bank is not applicable to the ACU, the bank would be able to do its international business more efficiently and profitably.
"We are now in a position to do both offshore business, through the ACU, and local business. In case we need to finance a company in the Middle East, we can do it from Singapore. Internationalisation of our financing portfolio will get enlarged through this route," he was quoted as saying.
However, he said that the bank is not yet planning to apply for a qualifying full-banking (QFB) licence in Singapore. This licence allows a foreign bank to open up to 25 branches and offsite ATMs in Singapore.
SBI and ICICI Bank are the only two Indian banks that have applied for QFB licence in Singapore.
According to the Comprehensive Economic Cooperation Agreement (CECA) signed between India and Singapore last year, banks of each country are allowed greater access to the other country. The pact allows three Singapore banks to open up to 15 branches in India, while a maximum of three Indian banks can get QFB status in Singapore.
Indian banks, however, do not get automatic entry into Singapore and have to meet the criteria set out by the Monetary Authority of Singapore.
As of now, eight Indian banks are operating in Singapore.
Indians comprise about eight per cent of Singapore's population of over four million.