SBM Holdings, one of the main local banks in Mauritius, has successfully applied for and been granted a Wholly Owned Subsidiary Licence, for the operation of a subsidiary in India, by the Reserve Bank of India (RBI). It was previously operating as a branch of SBM Bank (Mauritius) Ltd in India for the past 20 years.

SBM Holdings becomes the first foreign bank to be granted such a licence by the RBI. Indeed, until recently, the RBI allowed foreign banks to open branches only in India. However in view of issues that may arise due to the dependency of these local branches on their respective head offices, the RBI has changed its policy to now allow foreign banks to set up wholly owned subsidiaries, legally independent from their head office, in India. In this new context, the Indian-based entity can have its own capital and proceed to the nomination of members of the local board of directors. This allows the RBI to exercise more efficient control on the activities of the local entity, which it would not have able to so long as the local entity remained dependent on a foreign-based parent company.

For SBM Holding, the acquisition of this licence comes in line with the bank’s strategy to expand its activities in India. With this licence, SBM Holdings has positioned its banking arm, as a financial institution available for investors leveraging on the Asia-Africa and India-Africa corridors.