At a time when the Centre has cleared the decks for the maiden Bank of China branch in India, the Ministry of Home Affairs is learnt to have raised objections to a proposal by the Industrial and Commercial Bank of China (ICBC) to open a second branch in India.
Sources said the MHA has voiced concerns that ICBC — the world’s largest bank by total assets — has employed more than the authorised number of Chinese nationals at its existing Mumbai branch. While the ICBC Mumbai branch is authorised to employ a total of 3-4 Chinese nationals, it is being staffed by around 11-12 Chinese nationals, the MHA has communicated to the Finance Ministry while vetting the ICBC proposal to open a second branch in New Delhi, sources said.
ICBC and Bank of China had applied for a branch licence with the RBI last year.
The MHA, it is learnt, has conveyed that only 3-4 Chinese nationals working with the ICBC are registered with the Foreigners Regional Registration Office (FRRO), Mumbai. The other Chinese nationals working in the same bank leave just before completion of six months of their continuous stay in India, to circumvent the process of registration with the Indian authorities, sources said.
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Foreigners staying in India on visa durations of more than 180 days have to be registered with their respective FRRO. According to sources, the MHA’s is concerned that the issue of more than 3-4 Chinese nationals working at the ICBC branch violates authorisation by the RBI and the Centre, and these extra employees could be involved in undesirable activities in India.
Queries sent to the Finance Ministry, RBI and MHA seeking comment on the objections to the ICBC proposal did not elicit any response.
Even as the ICBC’s proposal is being examined from the security standpoint, the Finance Ministry has conveyed to the RBI that it has no objection to the proposal of Bank of China opening a branch, sources said. The central bank is soon expected to announce its decision to provide a branch banking licence to Bank of China.
Chinese banks have been expanding their business with Indian companies. In 2014, budget carrier IndiGo had announced an agreement with ICBC for funding of $2.6-billion to finance the purchase of over 30 aircraft. Reliance Power and Reliance Communication were among the first companies to accept Chinese funding.
Apart from the RBI, a committee comprising senior officials of the ministries of Finance, Commerce, External Affairs and Home Affairs examine proposals of foreign banks seeking to open branches in India.
At least 14 foreign banks have applied to the RBI last year to open branches in the country. Apart from the two Chinese banks, four banks from South Korea, three from Iran and two from the Netherlands have applied to set up branches and wholly-owned subsidiaries in India.
One bank each from the Czech Republic, Sri Lanka and Malaysia have also applied to open branches in India.[“Source-indianexpress”]