Qatar-based Doha Bank has applied to the Reserve Bank of India for a branch banking licence. In an interview with FE?s Sunny Verma, Doha Bank CEO R Seetharaman said the bank would prefer a branch banking licence, as opposed to a wholly-owned subsidiary licence model that RBI is contemplating for fresh entry of foreign banks into the country. Excerpts:

Can you give brief overview of the bank?

Qatar-based Doha Bank lies in the Gulf region that has six states. Essentially, these are oil and commodity driven economies having huge surpluses. Bilateral trade between India and Gulf countries is over $100 billion and there are about 50 lakh Indians residing in the Gulf. Apart from branch presence in the UAE and Kuwait, we have representative offices in Japan, South Korea, Singapore and London.

Have you applied for a banking licence in India?

We have applied for branch- banking licence. We are active on the corporate finance and trade finance side and have arranged funding for leading Indian corporates having operations in Qatar. On the corporate side, we have over $1-billion exposure to Indian companies, including the Reliance group and Jaypee. We also have brokerage in India?Doha Brokerage and Financial Services?mainly dominated in Kerala, Tamil Nadu and Andhra Pradesh. Our prime focus now is to get a banking licence. We resubmitted our application in February this year.

RBI is recently seen favouring wholly-owned subsidiary model to the branch banking approach for foreign banks. Would you be satisfied with subsidiary presence here?

We have applied for a branch licence. At this time I cannot comment on the subsidiary model. But we would prefer a branch licence to start with. SBI and ICICI too have a branch presence in Qatar. All I am trying to say is that the reciprocity should be there and Doha Bank is a capable candidate. I would expect them to respond to my application soon. We may do with a wholly-owned subsidiary in the area of a brokerage.

What are your thoughts on the world economy? Do you expect a double-dip recession?

I don?t find the world economy to recover in the next many years. It?s liquidity that is chasing the equities market. The fundamentals haven?t changed much, especially in the developed markets.

Some people feel cost of overseas borrowings for Indian companies is currently on the higher side. Do you agree?

Actually, the rating agencies are messing around with India?s ratings, which pushes up interest cost. If India is given a proper rating, the cost of funds will be cheaper for the government and corporates. We will be able to export more and have lower spreads on Credit Defaults Swaps (CDS). How can they rate India with a negative outlook, when it has 7-9% consistent growth for the past 7-8 years. We also need to value our intellectual property rights, gold reserves, oil and gas reserves and other mineral reserves. These have a bearing on a country?s ratings. Agencies should bring these factors into their accounting.

What should be the country?s rating?

India should be valued as an investment-grade country with a positive outlook. This would bring down the cost of funds for India by at least 200 basis points. The spread over our CDS should be a maximum of 300-400 basis points. You cannot marginalise India.