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China and India to step up banking cooperation
中國和印度加強銀行業合作
Chinese bankers are also getting in on the action. The world's largest commercial bank by total assets, the Industrial and Commercial Bank of China, or ICBC, is making the most of growing ties between China and India. It's gradually expanding its niche market in India.
Facing the Arabian Sea, Mumbai is often called the commercial capital of India. Remnants of British colonial culture blends into local lives. It's a land divided between slums and highrises. But for foreign ventures, it's their land of opportunity.
“One of the best things that happen to india is when Modi came to power last year, they have shifted from politics to economic development. They decided to open the economy up to the world, and attracted more foreign capital. I am pretty optimistic about that, ” said Hong Qing, CEO of ICBC Mumbai branch.
Hong Qing is heading the Mumbai branch of the Industrial and Commercial Bank of China. One of the big Four Chinese state owned banks, and the world's richest, ICBC has carved out a niche market for itself, in a sector largely dominated by Indian banks.
The Mumbai branch is among the 43 foreign banks in India, and the only Chinese branch in the city. Meanwhile, there are about six Indian banks setting up branches and offices in China. Hong said that local laws and regulations have limited the bank's expansion
"India is well known for its conservatism, in terms of regulating its financial sector. They regulate all the banks with the same rule. So we face strict capital requirement, liquidity requirement, and single board limit, which limits our business scope. That's why our local book is pretty small," Hong Qing said.
Being the first Chinese bank to open a branch in India, ICBC started with corporate banking, lending to major Chinese and Indian companies. But the fast expansion of bilateral trade and investment has provided the bank with new opportunities.
China's Belt and Road Initiative and Modi government's Made-In-India strategy has given both countries opportunities for more cooperation
The two countries have set a trade target of 100 billion US dollars this year, up from the current 71.6 billion in 2014.
Enhanced spending on infrastructure, implementation of projects and more reform measures are expected to provide further impetus to the Indian economy, giving rise to growing credit needs for banks in India.
Standard & Poor’s estimates a 2-3 percent in credit growth next year.
ICBC currently provides financial services in a number of sectors, including telecommunication, transportation, electricity, heavy machinery and the automobile industry.
One of its clients, the Indian infrastructure company JSW Steel, finds ICBC's global expertise helpful.
"As India goes on the next phase of growth, it requires expertise and network from a large global bank such as ICBC. They have also the experience dealing with Chinese economy and industries, which have grown phenomenally in the past decade or so. With that experience, they will be able to assist the growth of Indian companies," said Rajee M.Pai, chief financial officer of JSW Steel Limited.
The Mumbai branch of ICBC is leading the way for banking cooperation between China and India.
But it may soon be joined by its mainland peers, with the Bank of China currently applying for permits to enter into the Indian market.
And Hong is optimistic that an improved business environment will allow both sides to further explore the world's two fastest growing economies.
