Pakistan and India have agreed to allow bank operations on a reciprocal basis to facilitate trade between both countries that have a history of violent animosity.
The State Bank of India and the Bank of India will set up branches in Pakistan while the National Bank of Pakistan and United Bank Ltd. are to establish branches in India.
In the latest move along this detente, the Bank of India intends to open its first branch in Pakistan in the next six months to facilitate trade. Two-way trade between India and Pakistan stands at US$1.5 billion while informal trade is around US$6 billion. Banking industry sources hope that with the opening of bank branches in Pakistan and India, this informal trade will also run through formal channels.
Bank of India will open its first branch in Pakistan before the end of the Indian financial year or prior to March 31, 2013. Munir Alam, CEO and general manager of Bank of India’s Singapore branch, said this will depend on regulatory approval from the central banks of the two countries.
“We have no issue with starting operations in Pakistan. Once we get regulatory approval, we will launch a single branch,” said Alam. “The process to get regulatory approval has been initiated.”
Bank of India is the fourth largest public sector bank with over 4,000 domestic branches and 51 foreign branches. It intends to locate its Pakistan branch in Karachi. Some three-fourths of the branch employees will be Pakistani.
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