(SINGAPORE) Having already established a foothold in China, Singapore's banks are now broadening their presence in India, the other burgeoning global economic powerhouse. Yesterday, they announced further inroads into the promising market.

Related link: Click here for DBS' news release

DBS Bank has been granted approval to open eight new branches by the central Reserve Bank of India (RBI) while United Overseas Bank (UOB) has got the go-ahead to open its maiden branch in Mumbai.

DBS's new branches will come up in some of India's fastest-growing cities such as Bangalore, Chennai, Kolkata, Moradabad, Nasik, Pune, Salem and Surat, each of which is a hub of business activity. The bank already has branches in Delhi and Mumbai.

UOB, on the other hand, is just embarking on its Indian voyage. 'We confirm that UOB has been granted in-principle approval (yesterday) to open a branch in Mumbai within one year,' a UOB spokesman told BT.

Under the Comprehensive Economic Cooperation Agreement (CECA) signed between Singapore and India in June 2005, Singapore banks were to be allowed a total of 15 new branches in India within three years. Both DBS and UOB applied for the licences soon after CECA was signed. Since then, the Indian economy has become more attractive, with an average 8 per cent yearly GDP growth and an increasing demand for sophisticated banking services.

Meanwhile, BT understands that State Bank of India (SBI) - India's largest state-owned commercial bank - has been awarded qualifying full bank (QFB) status in Singapore. An announcement is expected soon.

In an earlier interview with BT last month, SBI (which has operated in Singapore since 1977) said it plans to open five branches in Singapore within the first year of getting its retail bank licence and will initially offer basic banking services such as savings, deposits and current accounts, and mortgages. It applied for the licence late last year.

Under CECA, Singapore was to give QFB status to three Indian lenders. Besides SBI, ICICI Bank - the country's top private lender - has also applied for QFB status here.

This rapid exchange of banking services has elicited cheer. '(India) is a key market for DBS,' said DBS Group Holdings chairman Koh Boon Hwee. Asian companies are being drawn to invest in India, he explained, and as Indian companies venture abroad, DBS - with its pan-Asian footprint - can play an important intermediation and advisory role to its customers.

All eight branches are expected to be operational within the next 12 months, said Rajan Raju, managing director and head of South and Southeast Asia, DBS Group. 'There are no restrictions on what we can sell in the branches,' he said. 'We will concentrate on corporate banking services like treasury and markets, lending, cash management and trade finance. For consumers, we will focus on our Treasures wealth management for priority customers.'

Mr Raju noted that the Indian cities provide the bank with 'a vibrant SME business for corporate banking, and proprietors can be targeted for wealth management products'. He added that DBS's presence in India would mean it can reach out to the Indian diaspora headed to Singapore for business, work or for studies.

'With these new licences in India, DBS Group will be able to service more customers in India through both the bank and its joint venture with the Murugappa Group, Cholamandalam DBS Finance,' he said.

Currently, the India business is a 'small contributor' to DBS profits, said Mr Raju. For the last financial year ended March 2007, net profit after tax for India came in at 740 million rupees (S$25.5 million) and saw a compounded annual growth rate of 310 per cent over the last three years. Indian operations have a balance sheet size of 60.71 billion rupees and a total capital of 12.09 billion rupees.

DBS has said it wants to double its share of contribution from outside Singapore and Hong Kong over the next few years, with India earmarked as a significant contributor. 'In addition to China, India is a market which the bank wants to concentrate on,' said Mr Raju.

DBS India currently employs 250 people and is looking at increasing the headcount number by at least 50 per cent, Mr Raju added.

Meanwhile, OCBC Bank said the Indian market was not currently a priority, but the bank was open to opportunities there. Koh Ching Ching, head of group corporate communications, OCBC Bank, said that for now, its engagement with India was likely to take the form of an offshore proposition.

She added that despite a lack of branch presence in India, the bank has been actively pursuing business opportunities there, focusing mainly around financing of trade flows between Singapore and India through partnerships with Indian financial institutions. 'As such, opening new branches in India is not an immediate priority for us,' she said.