Indian financial institutions are expanding their presence in the UAE, reassured that the economy in the Gulf is recovering. Two major Indian banks, IDBI Bank and Punjab National Bank (PNB), have opened commercial banking offices in the Dubai International Financial Centre (DIFC) in the past six months. They want to tap into lucrative financing deals related to trade between the two countries and the multibillion-dollar infrastructure projects being built in the Gulf.
"Basically the global crisis has happened; we feel it was a temporary blip," said NS Venkatesh, the chief executive of IDBI. "We're seeing signs of revival in the market. We see a lot of potential so that's why we're here." Bank executives said they were also eager to aid the investment goals of wealthy Indian expatriates. The UAE and India have long had a commercial relationship, dating back to when Dubai pearl traders sold their wares to merchants on the subcontinent. As the nation's economy modernised, those business relationships extended to almost all sectors of the economy. India has the largest presence among foreign countries in terms of companies registered with the Dubai Chamber of Commerce and Industry, according to the Indian consulate in Dubai.
As India has liberalised its economy in recent years to allow its banks to open branches overseas, many companies have chosen to set up their first outposts in the Gulf. "This is a very good moment for them to be doing this," said John Sfakianakis, the chief economist at Banque Saudi Fransi. "They were wiser to not participate much of the time; they stood back and they watched everybody. Now they're saying 'since we saw the dust settling, let's see what we can do'." IDBI was set up in 1964 by the government to finance major industrial projects and is India's sixth-largest public sector bank with 700 branches. PNB has more than 5,000 branches and 56 million customers.
Some Indian banks are also establishing retail operations in the UAE. The Union Bank of India opened a retail banking branch in Abu Dhabi in 2007 when it served about 1,500 customers throughout the region. Today, the customer ranks have swollen to 68,000, said Narayan Pradhan, the bank's chief representative in Abu Dhabi. "Dubai is the gateway for MENA," said G Raj Kumar Nair, the chief executive of PNB's DIFC branch. "We want to get into those regions also."
Anand Sharma, India's minister of commerce and industry, said recently talks had begun with GCC nations on a free-trade agreement. Mr Sharma told the India Business Summit in Dubai last week India's trade with the GCC was US$100 billion (Dh367.3bn) last year and would increase to $115bn this year. ashah@thenational