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Central Bank to invest Rs 225 cr in new overseas offices

BS Reporter  |  Chennai 

Central Bank of India is expecting to invest around $ 50 million (around Rs 227 crore) in next the two to three years for setting up offices in overseas countries. It has signed a memorandum of understanding (MoU) for joint ventures with local partners in

Mozambique and Bhutan to set up its presence in these countries, said a senior executive from the bank.

Apart from JVs, the bank is planning to set up its branches in Nairobi, Hong Kong, Dubai and Sri Lanka, according to S Sridhar, chairman and managing director, Central Bank of India.

"We expect the investment for our overseas projects, based on our plans now, will be around $50 million. It will not be infused in one stretch, but may be spread over the next two to three years," said Sridhar.

The public sector bank's overseas plans are under the consideration of Reserve Bank of India (RBI), and would have to go through various ministries before implementation.

In Mozambique, it has already signed an MoU for JV with a local company with activities in various business sectors. The bank would hold 74 per cent share of the JV firm while the rest is with the local partner. The initial capital investment expected for the project is around $ 10 million, Sridhar said.

It has also entered into an agreement with a local company in Bhutan and is analysing the strict conditions on financial inclusion by the government of Bhutan prior to entering the market. The total investment for this project would be around Rs 25 crore. The company would have 74 per cent stake in the JV.

"Our focus will be on Asian and African markets. We are planning the overseas activities as a vehicle to establish our presence in international market," said Sridhar.

The overseas branches would enable the bank to raise foreign currency funds in future, for which it does not have a provision at present. Further, it would also help the bank to serve its existing Indian clients, around five to six companies, who have their business in Mozambique.

In the domestic market, the bank plans to set up around 250 new branches in the current fiscal, out of which almost 30 per cent would be in rural areas. It has around 3,800 branches at present and with the expansion it would cross 4,000 branches by 2012, he added. A major part of the new branches would be conversion of its existing extension counters in various parts of the country, subject to RBI approval.

Under an MoU with International Corporation, part of the World Bank group, it is exploring co-financing options to support the priority states including Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Chhattisgarh, Jharkhand, Orissa, and north-east India. The bank is in talks with IFC to work out the nature of financing and one of the focus areas would be creating growth opportunities for micro and small enterprises in these states.

The bank, which crossed a total business of Rs 3 lakh crore in 2010-11, expects it to be around Rs 3.6 lakh crore by the end of current fiscal.

First Published: Mon, May 30 2011. 00:01 IST