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Banking on an Indian summer

Banking on an Indian summer

Bank of India Chief Executive Ramesh Chandra Baliarsingh wants to help bring the business communities of India and Cambodia closer together.

Bank of India Chief Executive Ramesh Chandra Baliarsingh talks about Indian investment in Cambodia, bilateral trade and the role his bank will play in bringing the two countries closer

By Nguon Sovan

There has been a solid beginning but REMEMBER all this takes its own time.

You set up in Cambodia during the economic crisis in May. Why then, and why Cambodia?
As you know, we have a very good presence in important financial centres around the world. In the recent past, we have placed more importance on opening branches in rapidly emerging markets like Cambodia.

When we opened the branch here, not only Cambodia but the whole world was going through an economic crisis. But our decision to open here was made a long time ago. So there was no relationship between the timing and the economic crisis – it was just coincidental.

When the bank first opened, you predicted it would facilitate trade and investment with India. What progress has been made in this regard?
Our prediction is intact. The presence of a government-owned bank, with more than 100 years of experience and a worldwide network, will definitely not only facilitate but will also boost trade and investment between the two countries. When you talk about tangible progress, it is difficult to quantify. As you agree, both the countries, to some extent, have been suffering from the global economic crisis. Nevertheless, we have been extending trade credit facilities in importing some consumer goods like tyres, medicine, etc from India. There are also some substantial investments starting to go into an integrated sugar industry. There are many inquiries.

There has been a solid beginning, but remember that all this takes its own time. The number of depositers and borrowers at our bank at the moment is still small – just over 100 customers – because we are new here. It needs time to grow; we cannot achieve it overnight. Moreover, trade and investment between Cambodia and India is still quite small.

India held a business forum in Phnom Penh last week. Is there evidence that economic ties are warming between the two countries?
The business forum held last week was a good beginning in strengthening economic ties between the two countries. This was, in fact, the first one ever in Cambodia. The forum has created a lot of interest among the local business fraternity in power generation and transmission, alternate energy, infrastructure, construction, Ayurvedic [traditional medical] products, manufacturing of bearings, processing of oil seeds, vegetable oils, mining of iron ore, coal, gold, manganese and educational institutions.

Cambodia is a highly dollarised economy. Has the recent weakness of the dollar had an impact on the activities of your Indian clients in Cambodia?
A weaker dollar will result in higher local prices for most imports coming into Cambodia from India, where the local currency has appreciated significantly. The Indian clients doing business in Cambodia suffer a bit, as they may lose the competitive edge in respect to pricing. However, for the exporters in India, to give them the necessary competitive advantages, the Indian government does provide various stimulus measures such as tax holidays, interest subvention etc, so they’re only slightly affected.

The Kingdom also has interest rates that are generally much higher than most of the rest of the world’s. Does that have any effect on your operations?
We have experience in operating in economies with high interest rates. You will appreciate that finance is an important ingredient of any economic activity. The cost of funds increases the cost of production, marginalising the competitive edge and the profitability of companies, which could change the status of a loan account to non-performing. We sincerely wish to lend at a minimum interest level, as we believe that a thin margin from a quality asset is better. Interest rates for loans at our bank are from 9 to 12 percent per annum, while interest rates for a one-year deposit is 2.2 percent per annum.

What is the most important thing that needs to change to improve Cambodia’s economic relationship with India?
There are many factors that could together help in improving economic relations; the regular exchange of business and national delegations between the two countries would be one of the key agents in improving economic relations. The recent visit of a few business entities from India at the behest of the Federation of Indian Chambers of Commerce and Industry is a stepping stone.

Another great opportunity to increase bilateral economic relations is the mutual participation in trade fairs, such as for the manufacturing and agricultural/horticulture sectors. The existence of trade and business associations in both countries should help to facilitate bilateral economic relations. They should cover a number of advisory, information and networking services for members and the general public. Our ambassador to Cambodia, Mr Rajesh Kumar Sachdeva, recently talked in an interview about the importance of direct flights between the two countries. Allowing the easy movement of businessmen and people between the countries is an important aspect to improving economic relations.

Cambodia now has a huge number of banks – both foreign and domestic. Is that healthy, and do you see consolidation occurring?
Yes, this is healthy for the sector at the moment. It will bring competition among the banks, which will be translated into better customer services, better pricing of banking products, and it will enhance the efficiency of the banking system.

The future? Only the strong banks with good corporate governance and sound policies will survive and do well – survival of the fittest. But opportunities at the present are sufficient for the current number of banks to not only survive but also to grow in a healthy way.

Cambodia’s stock market is expected to be launched next year. Is the Bank of India considering listing?
Yes, of course, but we may not list here at the time it launches – it may be at least three years after the launch before we join. But we have had good experiences dealing with stock markets.


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