India and Pakistan have agreed to allow two banks each from both the countries to set up branches across the border, Governor of the State Bank of Pakistan, Yaseen Anwar said.
“We have held discussions with the Reserve Bank of India and both sides have agreed to issue a full banking licence to two banks of each country,” Anwar told the Press Trust of India on the sidelines of a conference organised by the Institute of South Asian Studies in Singapore.
The two Indian banks that will be allowed to operate in Pakistan are State Bank of India (SBI) and Bank of India (BoI). On the other hand, state-owned National Bank of Pakistan and privately-owned United Bank Limited will be running full-banking operations across the border, once licensed by India.
Last month, MCB Bank Chairman Mian Mohammad Mansha also expressed interest in opening bank branches in India and announced that the bank had filed an application with the central bank in this regard. However, it has apparently not been given the go-ahead so far.
“It will take a few months to approve Indian banks’ licences on receiving them,” Anwar said, adding “we are ready to go tomorrow to India” to set up banking operations.
This development is part of efforts made by the two countries over the past many months to step up trade and economic relations. In a major decision earlier this month, India allowed investment from Pakistan paving the way for Islamabad to normalise economic ties by implementing much-delayed Most Favoured Nation (MFN) status for New Delhi.
Earlier this year, Pakistan switched to a negative list for trade with India, which may eventually lead to granting the MFN status to Delhi.
Trade between India and Pakistan is worth more than $2 billion and the two sides have agreed to increase it to $6 billion by 2014.
Published in The Express Tribune, August 23rd, 2012.
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