State Bank of India, the country's largest financial institution, expects to receive approval from Singapore for a banking licence that will allow it to operate up to 25 outlets in the island state, including retail branches and ATMs.
The move is part of a push by the state-controlled group to boost its international revenues, which account for about 10 per cent of its topline, as it seeks to take its place among the region's biggest financial institutions.
"Our global business is growing at a greater pace than our domestic business. So we're hoping we should be able to double it [as a percentage of the total business] in the next 10 years," said SBI chairman Om Prakash Bhatt.
India is keen to expand its banking system to help support its economic growth, which is the second fastest after China among Asia's large countries. Unlike China, its financial system is still small relative to the economy and its banks are dwarfed by many of their international peers, in spite of their vast potential market in India and overseas.
Industrial and Commercial Bank of China, China's largest bank, has a market capitalisation of about $55bn compared with SBI's $30bn.
Mr Bhatt said
The new "qualified full banking" licence, which Mr Bhatt expects to be approved in the next few months, would allow SBI to operate as a universal bank, providing a full suite of services to customers.
SBI has a network of 84 offices in 33 countries but these were mostly opened in a piecemeal manner to serve non-resident Indians.
The bank wants to capture a wider range of business, including opportunities created by the growing number of international acquisitions by Indian corporates. "While we have planted the flag everywhere, we need to build an international strategy," said Mr Bhatt. The Middle East was another area it was targeting, he added.
SBI has announced a $4.5bn rights issue that will double its capital base to help support its annual growth of 25 to 26 per cent in deposits and loans.
But its long-term growth continues to face hurdles from laws requiring the government to hold a minimum 55 per cent stake in the bank and restricting foreign ownership of its shares.