New Indian bank licensed

Brian Benza
Staff Writer | Friday May 25, 2012 00:00

 

The central bank has licensed a new commercial bank, the State Bank of India (SBI). SBI will become the tenth bank to run commercial banking activities in the country, Mmegi can reveal. Although no confirmation could be obtained from the public relations department of the Bank of Botswana at press time, sources close to the developments have confided to Mmegi that SBI, which is one of two Indian banks to have recently applied for a commercial banking licence in Botswana, received regulatory approval last week and will soon announce its operationalisation plans.'They received the licence last week and should start operations soon,' said the source.

Contacted for comment, SBI Botswana acting managing director Aditya Jha declined to confirm or deny the issuance of the licence. 'I am not authorised to speak to the press. My senior management from India should be in the country soon. I am sure they will be able to help you with your enquiries,' he said in a telephone interview.

SBI, which is India's largest government owned bank, first announced plans to open shop in Gaborone, where Indian companies are involved in diamond cutting and polishing businesses, three years ago. 'The company is busy with the regulatory process for opening its Botswana office. State Bank sees Africa as a continent of future opportunities and will target expansion in nations that are politically and economically stable,' M.G. Vaidyan, the regional head of India's largest bank was quoted by Bloomberg at a presentation in Johannesburg in 2009. While SBI is expected to unveil its plans in Botswana soon, another state owned bank from the world's largest democracy, Bank of India (BoI) has also applied for a licence to set up operations in Botswana.

In the Government Gazette of May 18, 2012, governor Linah Mohohlo announced that BoI has incorporated a company in the country and applied for a commercial banking licence. 'Notice is hereby given that in accordance with section 6 of the Banking Act, a Botswana registered company BOT (BTW) trading as Bank of India Botswana Limited, has applied to the Bank of Botswana under section 3 of the Banking Act for a licence to transact commercial banking business,' announced Mohohlo.

If BoI is licensed, it would be the third bank from the world's second most populous nation to set up shop here after SBI and the Bank of Baroda. Trade between Botswana and India mainly consists of foodstuffs, apparel, electrical goods, pharmaceuticals and diamonds.

Four Indian diamond cutting and polishing companies have also set up shop in Botswana as Diamond Trading Company (DTC) Botswana sightholders. SBI has 131 offices in 82 countries across the globe while BoI has 24 foreign branches and five representative offices.

SBI's presence in Africa, apart from South Africa, extends to joint venture banks in Mauritius and Nigeria as well as a representative office in Cairo, Egypt and Angola.  Since 2007, Bank Gaborone from Namibia, Capital Bank from Malawi, BancABC and ABM Amro have set up commercial banking businesses in Botswana despite the country's small market size.

A Greenfield banking project by microlender, Letshego and the transformation of NDB into a commercial bank are expected to add two other banks to the financial landscape in the next couple of years. A 2010 report by the Bank of Botswana indicates that the banking sector remains largely oligopolistic- dominated by a few major players- despite the entrance of new banks into the industry in the past five years.