Three Pakistani banks are in talks with their Government for opening branches in India. But, Indian officials say, none has yet formally applied to the Reserve Bank of India for approval.

“There are three banks that are interested in operating in India. They are preparing for it,” Pakistan’s Commerce Secretary Qasim M Niaz told Business Line .

These include the Commercial Bank of Pakistan and the Muslim Commercial Bank. The business community of both countries are keen that banks open branches across their respective borders to facilitate payments for exports and imports.

Discussions on opening up the banking sector started in August 2012 as part of the bilateral trade liberalisation process that began in February of that year.

While the central banks of India and Pakistan have agreed on the basic parameters for allowing commercial banks to open branches, no significant movement has taken place for a long time.

Formal application The State Bank of Pakistan had written to the RBI earlier this year stating that three banks wanted to open branches in India, but Indian officials say they have yet to officially hear from these banks. “There can’t be any movement on the matter till the RBI receives formal applications from banks,” a Commerce Ministry official said.

Some Indian banks, including Punjab National Bank and State Bank of India, were initially interested in expanding their operations across the border, but they have not pursued the matter with enthusiasm.

Indian officials believe that the delay is due to a trust deficit between the two countries with banks from both sides not too confident about future operations in each others’ territories.

“Banks are anyway tied up in tackling their own sets of domestic problems like rising NPAs (non-performing assets). They might need some more time to get into the act,” the official added. The two Governments are trying to support the initiative by relaxing norms.

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