In a rare interaction and an exclusive interview with Mint, Heng Swee Keat, managing director of the Monetary Authority of Singapore, or MAS, says Singapore is committed to the Comprehensive Economic Cooperation Agreement with India and welcomes the presence of Indian banks there. Edited excerpts:
How do you see the future of the financial sector opening up in Singapore and India?
Heng Swee Keat, MD of the Monetary Authority of Singapore (Illustration by: Malay Karmakar / Mint)
The cooperation and commitment of India and Singapore in implementing the banking commitments send a strong and positive signal to the business community and contribute towards deepening bilateral economic and investment activities.
The Comprehensive Economic Cooperation Agreement (Ceca) has provided a valuable platform to catalyze economic flows between India and Singapore.
With over 3,000 Indian companies in Singapore as at end-September 2007, Indian companies now form the third largest foreign corporate group in Singapore. Singapore’s FDI inflow into India is also significant. In 2007, it stood at US$1.43 billion, making Singapore India’s second largest investor.
Both Indian and Singapore banks play an important role to facilitate these economic flows. With the recent approvals for banks on both sides to expand their activities, we can expect them to serve the growing business and investment needs even better.
Under Ceca, three Indian banks are to be given qualifying full bank (QFB) status. State Bank of India (SBI) has already got it. When will the other two banks get it?
Prior to granting the QFB licence to SBI, there were already eight Indian banks operating under various licence categories in Singapore, with a total of 14 branches (including sub-branches and limited purpose branches).
The eight banks are: Indian Bank, Uco Bank, Bank of India, Indian Overseas Bank, SBI, ICICI Bank Ltd, Bank of Baroda and Axis Bank Ltd. Bank of Baroda and Axis Bank were admitted after Ceca. The presence of eight different banks from India makes it one of the highest in Singapore in terms of banking entities from a single country.
Singapore is committed to Ceca and we welcome the presence of Indian banks in Singapore. We will review applications from banks that meet our prudential standards.
How many Singapore banks will set shops in India under Ceca?
Under Ceca, India has committed to granting licences for our three local banks to set up 15 branches in India.
DBS Bank and the United Overseas Bank are expanding their presence.
Why did it take so long to open up the sector? The agreement was signed in August 2005.
In implementing any agreement, it is important for both parties to work out the technicalities and details, especially on prudential requirements, if we are to achieve a good outcome.
This will inevitably take some time. MAS is pleased with the level of cooperation with the Reserve Bank of India (RBI). This process of a frank exchange of views has enabled us to have a better appreciation of each other’s supervisory system, and has forged a better understanding among our staff.
We look forward to working closely with RBI and other agencies in India to further enhance our collaboration in developing our financial sectors.