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India, Pakistan to open 3 banks each

India and Pakistan are working to allow three banks to set up branches on each other’s soil to normalise trade relations and boost commerce. The two countries had agreed in August 2012 to issue a full banking licence to two banks from each country. However, normalization of trade was hit after Pakistan failed to deliver on a commitment to grant Most Favoured Nation-status to India in January 2013. Pakistan’s minister of state for commerce Khurram Dastagir Khan said Reserve Bank of India had lessened its restrictions and it is no longer two banks. Any bank that fulfils the requirement can apply. For the time being, the two countries are working on three banks each, he added. Khan, who will be participating in a SAARC business meet, said, the State Bank of Pakistan has just written to the RBI that three banks would like to open their branches in India. In 2012, the two Indian banks allowed to operate in Pakistan were the State Bank of India and Bank of India. On the Pakistani side, the quasi-state owned National Bank of Pakistan and privately owned United Bank were selected for running full banking operations in India once they obtained licences. However, there has not been much forward movement on the issue.

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