Standard Chartered Bank is courting Indian banks with a view to winning correspondent banking business in Southeast Asia.

One of the bank's latest moves in this respect is an agreement to become the core correspondent bank to most Southeast Asian countries for Vijaya Bank.

Hong Kong link

Vijaya Bank will direct its letters of credit (L/Cs) to 10 Southeast Asian countries through Standard Chartered Bank, Hong Kong, which will then reissue these to the ultimate beneficiaries.

Standard Bank has a similar agreement in place with Union Bank of India and is also said to be negotiating with three to four public sector banks to be their core correspondent bank in Southeast Asia.

Vijaya's rationale

The July agreement has been entered into by Vijaya "with a view to increasing our fee-based revenue streams" according to the bank's chairman and managing director, M S Kapur.

The markets are keeping a close watch on Vijaya as it prepares to sell of around 20 per cent of its stock in August. The government is looking to reduce its stake in Vijaya from 70.02 per cent to 51 per cent.

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