A State-owned Indian bank has received approval to open shop in Nairobi, deepening the emerging Asian economy’s interests in the country.
The move comes at a time when India has risen to the position of biggest source of Kenya’s imports.
The banking sector regulator Monday said it had licensed Central Bank of India to open a representative office in Kenya, giving the Mumbai-based lender a window to tap the growing business ties between the two countries.
A representative office is limited to offering marketing and negotiating lending and trade finance deals to customers, but cannot collect deposits from the public.
“We are targeting to sell our products particularly to Indians in the diaspora but we will also be looking for opportunities and with time we can move to commercial banking,” said Central Bank of India chief representative officer (Kenya) S. S Rao in a telephone interview.
The representative office will also offer consulting and advisory services for Indians living and working in Kenya.
“Under the Banking Act, a representative office of a foreign bank may engage in marketing and liaison roles in connection with the activities of its parent bank and affiliates but is not allowed to engage in banking business as defined in the Act,” said the Central Bank of Kenya (CBK) in a statement.
Mr Rao said that the representative office would be officially opened by the end of the month and start hiring gradually even though he did say how many staff would be employed.
The Indian lenders’ head office is, however, sending two employees to help in setting up operations.
Central Bank of India primarily engages in corporate, personal and investment banking.
Kenya becomes the second stop after Zambia where the bank has a partly-owned subsidiary, Indo Zambia Bank, which was incorporated in 1984.
Bank officials said that Africa is part of the bank’s expansion plan coming at a time when India, like her neighbour China, is increasing its trade ties in the continent.
“Through its representative office in Kenya, Central Bank of India seeks to explore potential business opportunities in the country with a view to evaluating the prospects of a long-term regional presence,” said the Central Bank’s statement.
“It is anticipated that the newly authorised representative office will facilitate and support the growing trade links between Kenya and India.”
India’s exports to Kenya stood at Sh174.6 billion in the first 11 months of last year or 15 per cent of Kenya’s total imports.
Indian companies are also bagging mega deals. India’s Global Procurement Consultants won a contract to monitor the implementation of a Sh11.4 billion World Bank-funded project to fight HIV and Aids in Kenya.
An Indian firm is among those that will supply equipment and technical skills for the Sh20.8 billion 127-kilometre transmission line in Kenya funded by the African Development Bank.
The CBK licence, makes Central Bank of India the sixth licensee and the second Indian bank to have a representative office in Kenya. The other licensees are Bank of China Limited, FirstRand Bank Limited, Nedbank Limited both of which from South Africa, HDFC Bank Limited (India) and HSBC Bank Plc.
The opening of representative offices is taking place as Kenya is about to roll out massive infrastructure projects that will need major funding, most of which is expected to come from abroad.
The government has invited tenders for construction of the Lamu port, a $5.3 billion venture (Sh462 billion). This is part of the $23 billion (Sh2 trillion) transport corridor project to link Lamu to Ethiopia and South Sudan.