US shores have been a distant dream for Indian banks but that dream could soon turn into a reality with some of the country''s top banks likely to get US branch licences soon. ICICI Bank and State Bank of India (SBI) could get clearance to open a US branch within a month''s time. The approval process is reportedly in its final stages and is awaiting clearance from the US Federal Reserve. The US has been dithering on licences for Indian banks for years now. Their main contention has been that India does not have an adequately stringent anti money laundering law to prevent the misuse of US bank branches. Indian authorities on their part have been arguing that money laundering laws are strong enough and in line with international practices, a point of view that the US authorities seem to have finally accepted.
The approvals could not come at a better time for both ICICI and SBI. Indian banks have been aggressively expanding abroad in order to capture the lucrative NRI remittances market. NRI remittances touched $25 billion in 2006-2007 and are growing at over 20 per cent per year. Close to 40 per cent of these remittances come from the US making a key market for anyone looking to tap the NRI customer base. At the same time, growing cross border deals between Indian and American companies are offering new opportunities for Indian banks.
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