Us Regulators May Monitor Indian Banks

Indian banks operating in the US are likely to come under the microscope of local regulators in the wake of terrorist attacks on Tuesday. "The regulators will critically look into the issue of funding the terrorist outfits and see even unwittingly any of the third world banks is helping these outfits. In effect, there will be sterner checks and balances on the funds flow," said a New York-based Indian banker.

The collective asset base of the Indian banks operating in the US is of around $2.5-$3 billion. The State Bank of India has nine offices in the US, followed by two of Bank of India and one of Bank of Baroda.

The State Bank of India has four offices in New York, one in Chicago, three in the West Coast including Los Angeles besides a representative office in Washington DC. Bank of India branches are located in New York and San Fransisco.

The lone Bank of Baroda branch is located about four kilometres from the World Trade Centre site in New York. Senior officials of all three banks said their employees were safe.

Both the Federal Reserve System and the Federal Reserve Bank of New York were open and operating. The discount window was available to meet liquidity needs of the banks.

Indian banks in the US are primarily into trade financing, loan syndication and picking up debt papers from the market. A part of the business also relates to the ethnic Indian community. "There will not be any change in the profile of business. We may need to be more vigilant on our clients," said a banker.

Indian banks operating in the US are subject to three-fold regulations: the banking laws of the concerned state where it is licensed to operate, the Federal Reserve as well as Federal Deposit Insurance Corporation (FDIC). "We expect tighter regulations and a hawk eye on money laundering, in the wake of this man-made catastrophe which hit the country," said another banker.