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Doha Bank sets ball rolling to start subsidiary in India

Economic Times:  December, 2016

Mumbai: Qatar’s Doha Bank will seek permission from its central bank to apply for a local subsidiary in India as it seeks to diversify into the world’s fastest growing economy and fully tap the potential for remittances between the gulf state and India.

R Seetharaman, CEO at the Qatari lender said it will apply with the Qatar Central Bank in the next two months and subsequently start putting together an application to open a local subsidiary with the Reserve Bank of India (RBI) giving it an opportunity to build a branch network in India.

“Our board has approved the plan in principle. We plan to build a retail branch network. In the first phase we plan to be present in 12 locations followed by six locations in the second phase and another six locations following that. The first phase will start in the next three years,” Seetharaman said.

Doha Bank has three branches in India currently. It added two branches last year after acquiring HSBC Bank Oman’s India business. Seetharaman said that the long term plan of the bank is to build a network in both Tier I and Tier II cities in India.

“Our long term plan is to build a subsidiary which you cannot do with one or two branches. We want to build a network in Tier I and II towns and connect the world. Capital is not a constraint for us. We are an AA rated entity and we will get capital as and when required,” he said. Doha Bank has invested $50 million in capital in India so far.

So far, State Bank of Mauritius and Singapore’s DBS Bank Ltd are the only two foreign banks that have publicly expressed willingness to open local units after RBI announced final guidelines for foreign banks wanting to open subsidiaries in India in November 2013. Both these banks have applied to the central bank in 2015.

RBI has promised to treat foreign banks opening local subsidiaries equally with local lenders, giving them the freedom to open branches and also later allow them to acquire local banks.

Banks from the gulf see India as a lucrative market because of the high growth potential and more importantly because they can tap deposits through the remittance inflows between their home markets and India. Doha Bank for example helped transfer Rs 3,200 crore in remittances into India last year.

Doha Bank’s larger peer Qatar National Bank with $195 billion in assets also get a license to start operations in India earlier this year. Doha Bank is much smaller with $23 billion in assets but has a head start with a $1 billion credit line to Indian companies and Rs 500 crore of fund and non-fund exposure in India.