Local and foreign banks in India are making and implementing plans to expand their trade finance networks across the country.

Kolkota-based Allahabad Bank (AllBank) is mulling future ties with banks in southern India while ABN AMRO is looking to open branches in the country's major export manufacturing centres.

Southern alliances

AllBank says it is considering alliances with southern Indian banks Laxmi Vilas Bank in Tamilnadu as well as Dhanalaxmi Bank and Federal Bank in Kerala. The Kolkota-based bank has hinted that it might take small stakes in the three banks should a deal be struck.

Any alliance would aim to improve the delivery of fee-based activities, including letter of credit (L/C) operations and other trade finance services according to an AllBank source.

Rising star

AllBank is a rising star in India's burgeoning crop of private banks. It was the country's oldest public sector bank and in a poor state at the time of its initial public offering in 2002, when it had one of the lowest spreads among public sector banks.

The three banks from southern India are believed to have approached AllBank with the idea of an alliance.

Export focus

ABN AMRO meanwhile has recently opened a branch at Tirupur, the city known as the country's knitwear capital or the Manchester of southern India.

The bank says it plans to open 30 branches in 20 Indian cities by the end of this fiscal year. Currently it has a presence in 14 cities. Export hubs Moradabad and Panipat would soon have ABN AMRO branches according to a bank officer.

ABN AMRO appears to be hoping that exporters will be attracted to its Maxtrad web-based global supply chain platform, the trade finance suite that provides a range of services, including online access to the L/C collections, initiation and amendment.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.