The Bank of India Kenya has targeted key industrial towns for expansion within the next four months, as the lender seeks to compete for growing trade ties between the two countries by matching its peers’ geographical reach.
The bank, which marked 60 years of operation in Kenya this week, has three branches in Westlands, Industrial area and city centre in Nairobi.
Bank of India is registered in Kenya as a branch of the Mumbai-based parent bank rather than as subsidiary, a factor that has limited its pace of expansion over the years since it has had to grow organically rather than through acquisitions.
“We plan to open four more branches in Kisumu, Eldoret, Thika and Nakuru. Our head office has cleared our proposal, and we are waiting for further clearance from the Reserve Bank of India, we expect this to go through in three to four months,” said the chief executive of the Kenyan operation, R.K Verma.
Mr Verma said the bank would draw a budget of the planned expansion once the clearance is given, with the amount depending on the size of the branches and the rent charged by the prospective landlords.
The bank will also have to meet Central Bank of Kenya’s approvals for the expansion plan.
Bank of India Kenya branch grew its asset base from Sh23.3 billion in 2011 to Sh27 billion last year, while its net loans and advances stood at Sh11.5 billion, up from Sh7.2 billion in 2011. Customer deposits were Sh20.8 billion supported by a core capital base of Sh3.9 billion by December 2012.
The bank has also been expanding its presence in Africa in the past two years, opening new branches in Tanzania, Uganda and South Africa, and is about to open offices in Botswana, Mozambique and Madagascar.
The bank is also looking to increase transaction income from the import business given that India has surpassed UAE as the largest exporter of goods and services to Kenya, according to data released at the end of last year.
The plan to put up more branches in the industrial hubs of Kenya is geared towards tapping the increased investments by Indian companies in sectors such as medical diagnostics, communications, petroleum refining, and ICT.
India grew its exports to Kenya by 27.1 per cent to Sh174.6 billion in the first 11 months of last year or 15 per cent of total imports.
Mr Verma said that the bank’s expansion drive is two-fold, and apart from opening more branches it is still seeking to localise and start operating as a subsidiary of the mother bank.
Bank of India made applications in 2010 to regulators in India and Kenya to be allowed to incorporate as an independent Kenyan bank, amid reports it had opened talks with a local lender for a potential tie-up.
They are still pursuing that option, Mr Verma said, with the bank’s board approving of the plans and now awaiting clarification on matters of tax and capital before making the move.