INDIA'S ICICI Bank began operations in Sri Lanka last Thursday with an eye on the lucrative inward remittances and booming bilateral trade, officials said in Colombo.
The bank's country head for Sri Lanka, Naveen K. Agarwal, said they hoped to corner a slice of the growing base of Indian corporate customers operating in the island and Sri Lankan companies doing business with Indian firms.
Trade between India and Sri Lanka reached about two billion dollars last year. The neighbours signed a bilateral free trade agreement (FTA) in 1998.
"We expect the volume of business to expand in the coming months as both countries are working towards deepening the trade pact," India's High Commissioner (ambassador), Nirupama Rao, said at the launch of the bank.
Besides corporate business, the ICICI also wants to get a foot into the lucrative remittance market. Indians residing in Sri Lanka send back around 100 million dollars each year.
The bank also hopes to service the needs of non-resident Sri Lankans who collectively remit around 1.5 billion dollars each year.
Being India's largest consumer lender, ICICI Bank plans to offer personal debt services such as mortgage loans, credit cards and corporate banking services ranging from securitisation to derivative products in Sri Lanka.
The Colombo branch is the first outside India in South Asia, with plans to raise its profile to 10 branches within the next two years.
The bank said it put down 25 million dollars in capital to start the Sri Lanka operation, meeting requirements by the island's Central Bank which wants all banks in operation in Sri Lanka to raise their capital to 25 million dollars by the end of 2007.
Under previous conditions, a foreign bank could have opened a branch in Sri Lanka with a capital of five million dollars.
Sri Lanka has 11 domestic banks, of which two are state owned -- the Bank of Ceylon and the People's Bank which dominate the market, accounting for about half the country's banking assets.
ICICI Bank is the fourth Indian bank to set up in Sri Lanka after the Indian Bank, Indian Overseas Bank and State Bank of India.
ICICI Bank has subsidiaries in Canada, Britain and Russia and offshore units in Singapore, Hong Kong and Bahrain.
Press Trust of India