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| Foreign banks review India rep office plans | |
| Abhijit Lele / Mumbai December 25, 2008, 0:22 IST | |
Hit by the global financial turmoil, foreign banks are reviewing their India strategy with BayernLB, a German banking entity, deciding to wind up its representative office in Mumbai as part of plans to exit from Asian region completely.
Royal Bank of Canada’s country head and chief representative-India Akhauri Sinha said most foreign banks intend to upgrade their representative offices to branch level over a period of time to get more business and also tap the opportunity in India.
There is now a rethink on business plans worldwide as banks have been hit by financial meltdown and losses, said the executive at a foreign bank. While some may try to manage with little activity and reschedule or postpone their scale-up plans in the country.
“When banks are trying to grapple with problems, there focus will be on home market rather than in trying to explore some different markets,” Sinha added.
Joiel Akilan, chief representative of Spanish bank BBVA, said the financial crisis may impact activites in the short run. But India will show better economic growth despite slowdown.
Faced with the ongoing turmoil on international financial markets, the BayernLB management decided to rethink the bank’s current business model. International activities will be scaled down considerably and German bank will completely exit from Asia. Apart from closing branches in Hong Kong and Shanghai it will shut down its representative office in Mumbai. It will, however, continue operations of German Centres in Gurgaon and Shanghai to support to German mid-market companies looking to do business in emerging markets such as China and India.
Foreign banks with representative offices in India are involved in a range of activites like consulting services, arranging trade finance, providing support to credit and project finance for infrastructure, energy, oil and gas through the balance sheet of their global parents.
According to Reserve Bank of India data, 41 foreign banks operated in India through representative offices.
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