ISLAMABAD: The government is bearing billions of rupees losses due indifferent attitude of the Reserve Bank of India (RBI) which is not allowing the Pakistani banks to open their branches in India.
Both Pakistani and Indian businessmen had been demanding opening of branches of their banks in each others country as well as both the Pakistani and Indian governments were keen in allowing each others banks to open branches on the either side. However, a source at the Federal Board of Revenue (FBR) told Customs Today that the RBI’s indifferent attitude towards the aspirations of the Indian government had blocked this process so far.
Due to unavailability of banking channels the business men have to use third country’s banking channel for funds transfer which is causing huge damage to revenue collection” the source said. When asked had FBR made any assessment about the total volume of loss to revenue on yearly basis, the source said that although no such effort had been made in near past, yet volume of revenue loss could be in billions of rupees.
The source said that at present Pakistani banks had branches in almost 36 countries namely Afghanistan, Mauritius, Azerbaijan, Malaysia, Bahrain, Oman, Bangladesh, Qatar, Belgium, Kingdom of Saudi Arabia, Canada, Seychelles, China, Singapore, France, Sri Lanka, Germany, Switzerland, Hong Kong, Tajikistan, Iran, Tanzania, Japan, Turkey, Kazakhstan, Turkmenistan, Kenya, UAE, Korea, UK, Kyrgyzstan, USA, Lebanon, Uzbekistan, Maldives and Yemen
Giving a brief historical background of dialogue between Pakistan and India on granting permission to each other’s banks to open branches on either side, the source said that the proposal for opening of bank branches in each other’s countries on reciprocal basis was first initiated in 2005. However, the process was stopped in 2008 in wake of Mumbai terrorist attacks. The process was reinitiated during 2011-12 and a couple of meetings were held between State Bank of Pakistan (SBP) and Reserve Bank of India (RBI) officials.
Then, the source observed that SBP at its end issued NOCs to three Pakistani banks for opening of branches in India but so far RBI has not given its approval to Pakistani banks for starting banking operations in India. Nevertheless, SBP’s steps were not reciprocated by RBI upon Central Bank’s last follow up,
The source quoted that RBI in its letter dated June 13, 2014 informed that the decision to open branches abroad, being a commercial decision for the banks, has been left to them. Therefore, at this stage we are not aware as to which Indian bank would be willing to open branch in Pakistan. As and when a bank approaches us with such a proposal we would inform you.
