The proposed India International Bank (Malaysia), which is a trio joint venture between Bank of Baroda (BoB), Indian Overseas Bank (IOB) and Andhra Bank, will have a paid-up capital of $100 million (around Rs 450 crore at the current exchange rate).

BoB, which holds the majority stake at 40 per cent, will invest about Rs 180 crore, while IOB (35 per cent) and Andhra Bank (25 per cent) will pump in about Rs 157 crore and Rs 112 crore, respectively, in the joint venture, said Mr M. D. Mallya, Chairman and Managing Director, BoB.

The bank will be operational by October this year and the first branch will be set up at Kuala Lumpur, he said, while talking to newspersons on the sidelines of a banking conclave organised by the Federation of Indian Chambers of Commerce and Industry here on Thursday.

Capital expenditure

Explaining the logic behind the joint venture, he said, “The capital requirement for setting up branches in Malaysia is quite high so we thought of adopting the JV route. Moreover, most of the clients in Malaysia are South Indians and since both Andhra Bank and IOB have a significant presence in the southern parts of the country, so we thought this JV will bring about a good synergy.”

BoB had earlier set up The Indo Zambia Bank in Zambia in joint venture with Bank of India and Central Bank of India. All the three banks hold 20 per cent stake each in Indo Zambia while the remaining 40 per cent is held by the Government of Zambia.

Overseas operations account for almost 25 per cent of the bank's total business and 23 per cent of its net profit as on March 31, 2011. The business has been growing at 35 per cent over the last couple of years.

The economic uncertainty in the US and Europe might not have an impact on the bank's overseas operations as most of its business was ‘India-centric'. BoB has 85 branches and offices abroad and it plans to open 15 more branches in countries such as Kenya, Tanzania, New Zealand and Australia, among others, by the end of this fiscal.

Capital infusion

BoB is likely to receive capital infusion to the tune of Rs 800 crore from the Government this fiscal, Mr Mallya said. “The Centre took a view of increasing its stake in the bank to 58 per cent from the earlier levels of 53 per cent. So it infused capital worth Rs 2,500 crore last year, thereby hiking its stake to 57 per cent. It will have to infuse another Rs 800 crore to take it up to 58 per cent this year,” he said.

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