Mumbai, Aug. 23: Saudi Arabia has allowed the State Bank of India (SBI) to open branches in that country.
The decision to allow SBI into the West Asian oil-rich kingdom was taken at a cabinet meeting chaired by King Abdullah. The council of ministers also cleared the entry of the National Bank of Pakistan.
?We had applied about two years ago and were told the Pakistani bank will be given the first opportunity to start business there,? an SBI official said.
SBI has been eyeing the overseas market for some time and even acquired a foreign bank in Mauritius. It is also looking at a few other banks in Africa and Southeast Asia.
At present, it operates in Bahrain. It has had full-fledged operations in Oman since April 2004.
SBI is present in most Gulf countries, including Saudi Arabia and the UAE, through exchange houses.
The Gulf countries, where nearly 31 lakh Indians live and remit money every month, is considered a vastly untapped market for Indian banks. Recent studies put the remittances at $7 billion.
?We are keen to operate full-fledged branches in the Gulf countries,? the SBI official said.
?We would like to open branches in Jeddah and Riyadh, the capital of Saudi Arabia,? the official added.
SBI wants to tap the potential of the salary remittance business from countries like Saudi Arabia.
?There is a fair amount of remittance business. The bank can facilitate oil imports and also work as an intermediary for Indian companies executing projects in Saudi Arabia,? the official added.
?It all depends on the licence we receive. In Oman, the State Bank functions like it does in India by providing retail loans. We want to set up full-fledged branches in the Gulf countries.?
The Saudi cabinet said the two banks would have to follow the kingdom's laws regarding banking control, companies and foreign investment.