Press Release

Dubai, Apr 13: Bank of India (BoI), the third largest public sector bank from India opened its Dubai International Financial Centre (DIFC) branch with a category 1 banking licence on Sunday.
The bank intends to extend its reach to Middle East and Africa customers through its DIFC branch. BoI has presence in 24 countries including the DIFC branch.

“Dubai has emerged as a regional and global financial hub. It is a very important destination for Indian financial institutions including public sector banks with global ambitions,” said Jayant Sinha, Minister of State for Finance, Government of India, who officially opens the branch.

The bank expects to expand both assets and liabilities side of the balance sheet of its Dubai operations initially from the large Indian business community based in the UAE and Middle East and eventually expand to the international business community in the region.

“We have large customer base from global Indian business community. Dubai being a global business hub, our existing business customers from both India and across the world are excited about our presence here. The regulatory environment and tax friendly business rules in the UAE are expected to attract a lot of our clients to do business through the UAE,” said Vijayalakshmi R Iyer, chairperson and managing director of BoI.

With many Indian companies looking to go global, Sinha said Dubai and the UAE serves as an international launch pad for these companies. “As the Indian companies expand internationally, Indian banks too have the opportunity to expand their global footprint. The UAE’s business friendly environment will encourage many Indian banks including public sector banks to expand their operations here,” said Sinha.

The minister said the government is encouraging Indian public banks to look out for expansion while raise capital from the market for their expansion needs. “India is doing everything to free up public sector banks to expand. While the government will continue to support public sector banks with capital infusion, the government policy is to make these banks structurally strong to raise capital on their own,” said Sinha.

The latest federal budget of the Government of India has proposed the creation of a specialized Bank Boards Bureau (BBB) which is expected to improve the management of public sector banks. Government has taken a number of steps to improve management at public sector banks since the publication of a Reserve Bank of India (RBI) committee report reviewing and making recommendations on bank board governance standards in May 2014.

New leadership appointments at four public sector banks in December 2014 adopted the recommendation to split the roles of the chairman and managing director. In another first for India, further five public banks have opened their recruitment process for managing director and chairman to candidates from the private sector.

“As part of improving the management of public sector bank, the government has introduced these structural changes. We expect the infusion of new talent from private sector will mitigate the talent shortage while the Bank Boards Bureau will eventually become a holding company of public sector banks to help these banks raise capital from the market and help improve their valuations,” said Sinha.

Reducing and changing the structure of state ownership of public sector banks, repealing legislation which enacts public banks as statutory bodies, and creating a uniform bank licensing regime for all banks irrespective of ownership, were all part of the original RBI recommendations made last year.