The Hindu : SBI, ICICI Bank, BoB, OBC get nod to set up OBUs

Online edition of India's National Newspaper
Wednesday, Apr 23, 2003

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SBI, ICICI Bank, BoB, OBC get nod to set up OBUs

NEW DELHI APRIL 22. State Bank of India, ICICI Bank, Bank of Baroda and Oriental Bank of Commerce are all set to put up overseas banking units (OBUs) in special economic zones, expectedly from June this year.

"We have signed ten applications for OBUs, out of which five are from SBI, two each from ICICI Bank and Bank of Baroda and one from OBC,'' D. K. Mittal, Additional Secretary, Ministry of Commerce and Industry, said on the sidelines of an exporters' open house here.

Mr. Mittal said these OBUs are expected to be operational by June this year.

The units have been permitted to accept funds from non-resident Indians and individuals. The Government has also allowed OBUs in one SEZ to fund units located in another SEZ, he said. He said te Government had not received any application from foreign banks. Foreign banks had sought to be allowed to lend overseas.

Banks are eyeing opportunities to set up OBUs as the entity could raise foreign currency funds from international markets at global interest rates.

The Reserve Bank of India had recently issued guidelines for the banks, either in the private sector or in the public sector, to set up OBUs with a minimum capital of $10 million. The interest of banks to set up OBUs also comes in the wake of India's ambitious target of attaining $80 billion exports or 1 per cent of global trade by 2007.

In the five-year Exim Policy unveiled by the former Commerce Minister, Murasoli Maran, it was announced that the OBUs would be considered as foreign branches of Indian banks and exempt from cash reserve ratio and statutory liquidity ratio, which otherwise the banks (outside the SEZs) have to maintain.

PTI

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