Six years after opening its first branch in China, the State Bank of India will open its second – in Tianjin, the port city 140 km away from Beijing – in February.

 

A huge chunk of China’s international trade to the rest of the world – and a large portion to India, is originated in Tianjin.

 

Dinesh Sharma, chief executive officer of SBI, Shanghai branch, said the branch will be opened with a capital of 300 million yuan or $47 million

 

The first branch in the Middle Kingdom was set up in Shanghai.

 

Sharma said SBI handled about $2 billion, or under Rs11,000 crore of trade finance, including letters of credit for Indian and Chinese companies.

 

Other public sector banks also have started setting up beachheads in China as trade between the two countries balloons.

 

UCO Bank has opened a representative office in Beijing, as has Bank of India, which also has a branch in Shenzhen.

 

Canara Bank, on the other hand, has a branch in Shanghai, as has Allahabad Bank.

 

The largest private sector lender, ICICI Bank, is in the process of setting up one.

 

According to the rules of engagement, Indian banks have to first set up a representative office and only later are they allowed to upgrade it into a full-fledged bank, based on bilaterals.

 

SBI’s Shanghai branch focuses on trade in eastern China, while Tianjin unit focuses on the north.

The Shanghai unit has a capital base of $76 million.

 

Bilateral trade between India and China has soared in recent years, touching $75 billion in 2011, but then declined a tenth in 2012.

 

SBI plans to set up a third branch in Guangzhou, another huge trade hub, next.

 

Sharma said SBI is the first Indian bank to get a licence from China to do business in renminbi or yuan, the local currency. A bank needs to operate for 5 years before it gets this eligibility. 

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