Indian banks to form banking JV in Malaysia

Bank of Baroda (BoB),Indian Overseas Bank (IOB) and Andhra Bank have formed a joint venture to start banking operations in Malaysia shortly.

Public sector lenders Bank of Baroda (BoB),Indian Overseas Bank (IOB) and Andhra Bank have formed a joint venture to start banking operations in Malaysia shortly.

We have jointly reached an agreement to open a full-fledged independent branch in Malaysia very soon. Bank of Baroda will hold 40 per cent stake,while IOB and Andhra Bank will share 35 per cent and 25 per cent respectively. We are waiting for the prior approval of the regulator there and I hope it will come in a months time from now. Our operations are likely to start in June 2011, IOB chairman and managing director M Narendra told The Indian Express here on Friday.

When asked about the structure of the venture,Narendra did not divulge details about the total capital of the proposed bank.

We would run the bank in the name of India International Bank of Malaysia Ltd. IOB would invest around 175 million Malaysian Ringit in the venture. As 3 Malaysian ringits are equivalent to one US dollar,it would come around $58.4 million approximately.

To begin with,the joint venture is likely to have one branch,and later all three banks will try to spread the presence of India International Bank of Malaysia all over the country.

We will experiment with one branch only initially,and later we will increase the number as per demand of the costumers. On mobilisation of deposits,he said,Certainly,India International Bank of Malaysia will be able to accept deposits and provide loans to the Malaysian nationals too. Our main aim is to mobilize deposits and increase our profitability there, he said.

IOB is the only bank in the country which has plans to set up an in-house software IT subsidiary unit which will market infotech products to other lenders. As the bank can not sell IT solutions by itself,we’re looking for a joint venture with a software company. We plan to set up an IT subsidiary separately and it would the first of the kind in the country. The bank will appoint consultants to analyse proposals from existing IT players, Narendra said.

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Apart from this,IOB is also aggressively looking for opportunities to open branches in Africa and Asia. We are very bullish on expanding abroad,especially African and Asian countries. We are targeting a total overseas business of Rs 1,00,000 crore by the end of FY 12 from the current Rs 15,000 crore, Narendra said,adding that the bank would be raising around Rs 5,000 crore through a medium term note (MTN) programme by July for fuelling the expansion.