Dutch lender Rabobank International Holding BV is set to receive the Reserve Bank of India (RBI) nod to set up banking operations in the country.
Rabobank has to divest its holding in Yes Bank to below 5%, a precondition set by the RBI for the Dutch lender to get the licence in the country. ?The bank has received in-principle approval from the RBI to set banking operations in the country,?? said a source. Currently, the 110-year-old food and agriculture bank, which has a triple-A rating, holds 4.9% stake in Yes Bank down from 15.9%. In July, 2010, the foreign bank sold about 11% stake in Yes Bank in the open market to investors like Life Insurance Corp of India, Birla Mutual Fund, Merrill Lynch Mutual Fund and Citigroup Global Markets (Mauritius).
According to the Indian banking norms, a foreign bank that holds over 5% stake in a domestic bank cannot set up banking operations in the country. Sipko Schat, Rabobank?s representative on the Yes Bank board has also resigned. The bank now has no representation on the private sector bank board.The central bank gave a licence to YesBank in May 2004 and the Dutch bank had committed to remain invested in the lender for at least five years. It has been free to sell its stake since March 2009.
At present, Rabobank International is present in the country through a wholly owned subsidiary Rabo India Finance, a non-banking finance company (NBFC). The NBFC provides corporate banking services and active in the micro finance space along with providing advisory services in the food and agriculture space. It has branches in Mumbai and Delhi. Ashwin Parekh, Partner, Financial Services, Ernst and Young said, ?Foreign banks have been impressed with the stability of the financial sector in India during the financial crisis. And of course, the opportunity is huge even if they have only a few branches.?
A clutch of foreign banks this year has got approval from RBI to set banking operations in the country.
These include Credit Suisse Group AG, UBS AG, First Rand Bank, Commonwealth Bank of Australia, and Australia and New Zealand Banking Group Ltd.
