Advertisement

SBI Jeddah to cease operation by 2017 end as SAMA clears the way

A Saudi money changer counts U.S banknotes at a currency exchange shop in Riyadh, Saudi Arabia September 29, 2016.

A Saudi money changer counts U.S banknotes at a currency exchange shop in Riyadh, Saudi Arabia September 29, 2016.

REUTERS/Faisal Al Nasser

11 August 2017
Hassan Cherappa 
Jeddah - The State Bank of India, Jeddah, will soon cease operation as the Saudi Arabian Monetary Authority (SAMA) has granted the go ahead for it. SAMA, the central bank, announced on Thursday that it has approved the request of SBI to suspend its banking operations in the Kingdom in view of a change in strategic plans of the parent bank pertaining to its overseas branches.

SBI Jeddah, which had been licensed to start operations in the Kingdom on Oct. 3 2005, is expected to exit the Saudi banking market by the end of the year 2017.

SAMA decided to approve the Indian bank’s request in accordance with article 11 of the Banking Control Law and this will be after fulfilling the statutory requirements and taking into account of the rights of customers and depositors.

SAMA has called on all customers and depositors of SBI Jeddah to exercise their rights guaranteed by the Saudi banking regulations to file a complaint with the SAMA Customer Protection Department in the event of any violation of their rights from the part of the Indian bank.

The complaints can be registered after contacting the toll free number (800 125 6666) or online contact with SAMA’s website or visit customer service division of the central bank’s headquarters.

There are 14 branches of licensed foreign banks in the Kingdom, the most recent of which was the branch of the Tokyo Bank of Japan, which was licensed in Dec. 2016. In May, the Council of Ministers granted license to establish a banking company under the Bahrain-based Gulf International Bank. SAMA has recently granted license to the branch of the Emirates National Bank of Dubai to open three additional branches in the Kingdom.

SBI is India’s largest bank and this banking behemoth has 20 percent of market share in deposits and loans among Indian commercial banks. With the recent merger of five of its associate banks, SBI will enter the league of top 50 global banks with 420 million customers, and more than 24,000 branches. Though Indian expatriates make up one third of the Saudi expatriate population, the performance of SBI Jeddah was not up to the mark. During its operations spanning over a period of 12 years after initial years of bottlenecks, the bank was unable to attract a large number of Indian customers, including businessmen and professionals.

There are a number of factors attributed to this. “Transaction from SBI Jeddah is possible only to SBI branches in India and there are not sufficient number of branches in every nook and corner of the country,” according to an Indian banking official. “Though the SBI Jeddah gives reasonably competitive exchange rates, most expatriates in Jeddah and elsewhere in the Kingdom rely mainly on Al-Rajhi Bank or Al Amoudi Exchange Company for their remittances. Al-Rajhi has tie up with at least a dozen Indian banks that spread all parts of India and this is beneficial for easy and quick remittance that takes only a few minutes,” said Abdul Razak Edavanakkad, who works with Tahweel Al-Rajhi Bank. “The location of SBI Jeddah is also another handicap. If the branch was in Sharafiyyah or Balad, it would have much more acceptance and accessibility from the members of the community,” he said, adding that SBI’s marketing expansion plans also did not yield expected results.

SBI had earlier plans to open branches in Riyadh, Dammam and Jubail following the opening of Jeddah branch. Its anticipated massive growth plans have been deadlocked with an apathy on the part of Indian businessmen and investors. Its plan to attract non-Indian clients has also not gone well.

Advertisement
© The Saudi Gazette 2017
Advertisement

Most Popular

In the last 24 hours

Advertisement

People In The News

Advertisement