It is nearly five decades after setting up its first Pacific presence in Fiji, that Bank of Baroda, India’s third largest public sector bank has made its next move by setting up operations in New Zealand and Australia.
On September 1, Bank of Baroda New Zealand became the country’s nineteenth banking company after receiving a licence to operate from the Reserve Bank of New Zealand. It is all set to begin operations later this year with a full complement of retail and commercial banking services.
The bank will operate in New Zealand as a subsidiary of India’s third largest public sector bank – Bank of Baroda – which has assets of over US$ 50 billion and operates 3000 branches in nearly 70 countries across the world.
“The bank is a New Zealand entity, not a branch of the parent Bank of Baroda,” the Indian bank’s executive director Rajiv Bakshi who was in Auckland told Indian Weekender last week. “Bank of Baroda NZ will start off with a range of retail and commercial liability and asset products, deposit and remittance products, trade finance and corporate loans.”
Starting up with a capital of NZ$40 million, the bank plans to roll out residential mortgages from the start but restrict its activities in the short term to retail and wholesale banking. Its business plan for New Zealand is still being finalised and after it settles down the bank may look at expanding its activities in the capital markets business, Mr Bakshi said at a meeting attended by Kiwi Indians at the Stamford Plaza Hotel.
Clearly, it is the bank’s remittance service that is likely to be one of the main attractions for the Indian community with links back in India because its web based remittance module, which all account holders can use, allows money transfers from New Zealand to any of Bank of Baroda’s branches across India in real time, according to Mr Bakshi.
“Thanks to our technology backbone and inter-bank network in India, even transfers from New Zealand and Australia to accounts in other banks in India can be done on the same business day and at exchange rates better than what the competition offers,” he said.
The 101 year old bank, formed by the then Maharaja of the western Indian kingdom of Baroda, Sayajirao Gaekwad-III, was one of the earliest Indian banks to take its presence outside the subcontinent by following the Indian diaspora – particularly the business oriented Gujarati community – wherever it established itself in substantial numbers. It started its first overseas operations in Africa in the 1950s and set up its Australasian presence with Fiji in the early 1960s, where it now runs five branches across the country.
The process of obtaining a licence from the Reserve Bank was “not difficult in this instance,” Mr Bakshi said. “Earlier, Australia and New Zealand had not been open to allowing Indian banks to operate here but that has now changed because the world has now warmed to India’s tremendous potential.”
Bank of Baroda NZ managing director Satish Chander Vermani, who set up the bank’s Sydney operations and has now moved to Auckland, said the bank would begin operations with a single Auckland based office and would possibly add another shortly. “But we are looking at some novel ways and interesting options to deliver services to the wider community,” Mr Bakshi said.
While it will naturally concentrate on the Indian community initially because of it being well known and because of the niche services it plans to offer, the bank plans to extend its marketing communications to other ethnic communities including people from Fiji and the Pacific Islands.
“Bank of Baroda is an international bank with 23 per cent revenue coming from its overseas operations and we will extend operations wherever there is a market for our banking services,” Mr Bakshi said.
The bank has appointed two local directors in New Zealand: One is the Waitakere City chief executive Vijaya Vaidyanath, who previously worked with the Reserve Bank of India for 18 years, and the other is Fiji-born Labour MP Dr Rajen Prasad. As part of its long term plans, the bank will actively look at the non-banking finance and capital markets businesses, Ms Vaidyanath told Indian Weekender.
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