India should allow U.K.'s banks to open more branches here, U.K. Minister for Trade, Investment and Business Mervyn Davies said Thursday.
"We do have a number of banks in the U.K. who see great opportunity in the Indian market and would like to expand their branch presence," Davies, also a former chairman of Standard Chartered PLC, said in a speech at a banking event.
"Not just banks, but insurance companies and many professional services (in the U.K.) have a huge pent-up demand to expand in India," Davies said.
Under World Trade Organization obligations, India has to provide licenses for 12 foreign-bank branches a year.
But the Reserve Bank of India had earlier this year put on hold a roadmap on expanding the presence of foreign banks, citing uncertain global conditions. The entry of foreign banks into India should be gradual, without causing serious imbalances in the local market, the central bank's committee on financial-sector assessment said in a report.
HSBC Holdings PLC, Standard Chartered and Barclays PLC are some of the major U.K.-based banks operating in India.
Indian banks are also eyeing the U.K. market, Davies said. "Reciprocity is the answer."
Speaking at the same event, the chairman of State Bank of India (500112.BY) said the state-run lender plans to open five more branches in the U.K. by June.
"We have seven branches in the U.K. and will open another branch hopefully by next month and by June, we will open four more," O.P. Bhatt said.
Bhatt said his bank's current business in the U.K. is worth more than $3 billion.
State Bank of India, India's largest lender by assets, plans to open a total of around 40 international branches over the next one year in the U.K. Canada, the U.S., the Maldives, Sri Lanka, Hong Kong and other countries.
Bhatt said the bank is open to small acquisitions in the domestic and International markets, including in the U.K.
A State Bank of India official, who asked not to be named, said the lender can set aside up to $1 billion for an acquisition.
-By Nupur Acharya & Harsh Joshi, Dow Jones Newswires; 91-22-6145-6115; harsh.joshi@dowjones.com
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