Tuesday, September 26, 2006

Mutual Recognition of banks with Singapore

Under the CECA with Singapore, both the countries would have to allow three banks from each country to have QFB status. QFB status allows a bank to have 15 branches and provide for other facilities such as ATMs.
While Singapore banks qualify for QFB status in India, Indian banks would not qualify for the same in Singapore in view of their stringent monetary standards. Hence India has been demanding a relaxation of the standards for granting QFB status to Indian banks. In the run up to pressure Singapore, India has not granted QFB status to Singapore banks and has also not allowed Temasek to hike its stake in ICICI Bank as the clubbed stake of Temasek and GIC (another investment arm of Singapore Government) will exceed 10%. According to RBI norms, no foreign entity can have more than 10% in an Indian bank.