"I think everybody is warming up to the potential of India and the Indians"
Mr. Bakshi, how did Bank of Baroda decide on New Zealand as part of the expansion across the world or was there something special that attracted Bank of Baroda to New Zealand?
Basically, Bank of Baroda is one of the very few Indian banks which has substantial foreign operation. So we have experience of working abroad for over 56 years. We have had a very strong presence in Fiji and in this part of the world, particularly New Zealand, there has been no Indian bank but the Indian Diaspora has been increasing and particularly a lot of Fijian Indians came here, so we started to have a very serious look at New Zealand, both as part of our global expansion as well as because of this phenomena that our Fijian Indians were coming here and New Zealand was becoming important in tourism. A lot of tourists are being attracted from India and then the Diaspora is increasing and therefore, there is scope for increase in relationship between India and New Zealand going forward.
What are the banking services you are starting with from day one?
We will start day one with all the retail and commercial liabilities and asset products which includes all the deposit products for the individual clients as well as for the corporate clients, the remittance products particularly to India and anywhere in the world, on the corporate side the trade finance products, the corporate loans, loans to individuals and the delivery mechanism including all the cards and retail products.
Will you have internet banking from day one?
We will have it. We plan to have it, day one may mean putting into place 2 months or 3 months but yes it will be there.
You mentioned money transfers will be almost immediate, through Bank of Baroda. Can you please explain how this will work?
We have a system because our Indian operations are totally networked and so we have a web-based remittance product. We can give an instant credit to anybody maintaining any account with Bank of Baroda. In fact, the remitter can see that sitting here that the account has been credited and even if it has to go to any other bank account anywhere in the country, there is a straight-through remit instruction going from here, they connect into the RTGS or NEFT network in India and the money goes into their account.
And this happens with other bank as well, other Indian banks as well?
Other Indian banks too. That’s RTGS and NEFT, this is straight through, instruction goes electronically into RTGS, so it’s almost the same day.
That’s going to be a major draw card as far as Indian Diaspora is concerned?
Yes. Same day credit plus we give better exchange rates than anybody else.
And what was the process of coming to New Zealand like in terms of regulatory and procedural matters, how was it?
In the latest initiative, it was not difficult. For long years, New Zealand and Australia, they have not been very open to giving banking licenses but now it has not been difficult. I think everybody is warming up to the potential of India and the Indians.
What kind of challenges do you see operating in New Zealand?
The only challenge is we are new here, a new kid on the block and they are established players. The established players have got established franchises and they have established knowledge of the marketplace, so that’s the challenge. Otherwise, banking wise, we feel we are quite okay. Banking technique wise, sincerity wise, commitment wise, we are okay but yes we cannot have the same strong network as the local banks have, perhaps in the short term nor can we have perhaps the knowledge of the local market, being so new.
Indian Weekender asked Mr Rajiv Bakshi why Indian banks like the Bank of Baroda remain so strong while so many big western banks fell over in the financial crisis. His reply:
There are quite a few factors. In fact, partly it is the Indian economy, partly the bank’s initiative, but substantially it has been the initiative of Indian regulator, which is the Reserve Bank of India. So on one count, the Indian economy continued to grow even at the worst of times at over 6%.
The Indian banks were prudent to not get into very complicated transactions but the maximum credit goes to Reserve of India who took very prudent steps. They monitored and managed the monetary situation and the regulatory situation very well. They increased the rates whether they were preemption rates or they were interest rates strongly when the inflation was going up to July 2008. They were equally quick to lower them down when the liquidity became tight.
They also kept on doing the talking that all the banks in India are strong, so the interbank market continued to function very strongly and there were no hiccups in that. They made the banks maintain high capital adequacy ratio so that there wouldn’t be any bank weakness created in that. They also saw to it that any sectors which could have more risks like commercial real estate or capital market or commodities, they dissuaded the banks from lending more into those sectors by increasing either the risk weights or by increasing the provisioning requirement.
They also saw to it that the banks did not enter complex derivative transactions, which the regulator could not manage or monitor. So that’s where the banks were saved from the entry into those products which have been the pain of the international world. They got into complex securitisation deals or they got into complex derivative deals and therefore they suffered a lot of problems. So RBI has been great in that.
Mr. Bakshi, how did Bank of Baroda decide on New Zealand as part of the expansion across the world or was there something special that attracted Bank of Baroda to New Zealand? Basically, Bank of Baroda is one of the very few Indian banks which has substantial foreign operation. So we have...
Mr. Bakshi, how did Bank of Baroda decide on New Zealand as part of the expansion across the world or was there something special that attracted Bank of Baroda to New Zealand?
Basically, Bank of Baroda is one of the very few Indian banks which has substantial foreign operation. So we have experience of working abroad for over 56 years. We have had a very strong presence in Fiji and in this part of the world, particularly New Zealand, there has been no Indian bank but the Indian Diaspora has been increasing and particularly a lot of Fijian Indians came here, so we started to have a very serious look at New Zealand, both as part of our global expansion as well as because of this phenomena that our Fijian Indians were coming here and New Zealand was becoming important in tourism. A lot of tourists are being attracted from India and then the Diaspora is increasing and therefore, there is scope for increase in relationship between India and New Zealand going forward.
What are the banking services you are starting with from day one?
We will start day one with all the retail and commercial liabilities and asset products which includes all the deposit products for the individual clients as well as for the corporate clients, the remittance products particularly to India and anywhere in the world, on the corporate side the trade finance products, the corporate loans, loans to individuals and the delivery mechanism including all the cards and retail products.
Will you have internet banking from day one?
We will have it. We plan to have it, day one may mean putting into place 2 months or 3 months but yes it will be there.
You mentioned money transfers will be almost immediate, through Bank of Baroda. Can you please explain how this will work?
We have a system because our Indian operations are totally networked and so we have a web-based remittance product. We can give an instant credit to anybody maintaining any account with Bank of Baroda. In fact, the remitter can see that sitting here that the account has been credited and even if it has to go to any other bank account anywhere in the country, there is a straight-through remit instruction going from here, they connect into the RTGS or NEFT network in India and the money goes into their account.
And this happens with other bank as well, other Indian banks as well?
Other Indian banks too. That’s RTGS and NEFT, this is straight through, instruction goes electronically into RTGS, so it’s almost the same day.
That’s going to be a major draw card as far as Indian Diaspora is concerned?
Yes. Same day credit plus we give better exchange rates than anybody else.
And what was the process of coming to New Zealand like in terms of regulatory and procedural matters, how was it?
In the latest initiative, it was not difficult. For long years, New Zealand and Australia, they have not been very open to giving banking licenses but now it has not been difficult. I think everybody is warming up to the potential of India and the Indians.
What kind of challenges do you see operating in New Zealand?
The only challenge is we are new here, a new kid on the block and they are established players. The established players have got established franchises and they have established knowledge of the marketplace, so that’s the challenge. Otherwise, banking wise, we feel we are quite okay. Banking technique wise, sincerity wise, commitment wise, we are okay but yes we cannot have the same strong network as the local banks have, perhaps in the short term nor can we have perhaps the knowledge of the local market, being so new.
Indian Weekender asked Mr Rajiv Bakshi why Indian banks like the Bank of Baroda remain so strong while so many big western banks fell over in the financial crisis. His reply:
There are quite a few factors. In fact, partly it is the Indian economy, partly the bank’s initiative, but substantially it has been the initiative of Indian regulator, which is the Reserve Bank of India. So on one count, the Indian economy continued to grow even at the worst of times at over 6%.
The Indian banks were prudent to not get into very complicated transactions but the maximum credit goes to Reserve of India who took very prudent steps. They monitored and managed the monetary situation and the regulatory situation very well. They increased the rates whether they were preemption rates or they were interest rates strongly when the inflation was going up to July 2008. They were equally quick to lower them down when the liquidity became tight.
They also kept on doing the talking that all the banks in India are strong, so the interbank market continued to function very strongly and there were no hiccups in that. They made the banks maintain high capital adequacy ratio so that there wouldn’t be any bank weakness created in that. They also saw to it that any sectors which could have more risks like commercial real estate or capital market or commodities, they dissuaded the banks from lending more into those sectors by increasing either the risk weights or by increasing the provisioning requirement.
They also saw to it that the banks did not enter complex derivative transactions, which the regulator could not manage or monitor. So that’s where the banks were saved from the entry into those products which have been the pain of the international world. They got into complex securitisation deals or they got into complex derivative deals and therefore they suffered a lot of problems. So RBI has been great in that.
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