Public sector banks, Bank of Baroda, Indian Overseas Bank and Andhra Bank have collaborated to set up a new Malaysian bank, "India BIA Bank (Malaysia) Bhd"
SA Bhat, chief managing director, IOB, said, there have been around seven rounds of discussions with the Malaysia authorities and the necessary approval for the joint venture has been obtained from them.
MD Mallya, chairman and managing director, Bank of Baroda, said, "We have obtained necessary approval from Reserve Bank of India (RBI) for setting up the subsidiary in joint venture with other two banks and this has also been appraised to Bank Negara Malaysia. After completion of remaining formalities, Bank of Baroda will approach Bank Negara Malaysia for regulatory approvals to set up a banking company."
Bank of Baroda will be the major stakeholder (40 percent stake) with an equivalent equity base of Rs 405 crores, followed by IOB and Andhra Bank with a 35 percent and 25 percent equity base respectively.
Commenting on the joint venture, Bhatt said, "With Bank of Baroda having extensive network in Central and Northern India and IOB and Andhra Bank in the Southern parts of India, the subsidiary in Malaysia will be able to attract tech expatriate population who has migrated to Malaysia from different parts of India."
The new subsidiary plans to trap the local corporate and ethnic business community market. It will also extend advances to edible and mentha oil businesses. In relation to the business prospective in the region, Bhatt pointed, "The partners expect to double their investment in the venture "very shortly", given the huge business potential."
The bank is expected to commence operation by September this year, with its first branch in Kuala Lumpur.
Established in 1959, under the Central Bank of Malaya Ordinance, 1958, Bank Negara Malaysia is the central bank in Malaysia. It is the apex bank in the country that defines the financial policies for the system and acts as a financial adviser to the Government.