Indian bank branches in Singapore under scrutiny

Regulators in Singapore have reportedly stepped up their scrutiny of some local branches of Indian banks on concerns about asset quality.

India's slowest economic growth in a decade and a weakened rupee have weighed on the balance sheets of heavily-leveraged Indian companies, including those that have raised money from Indian lenders in offshore centres such as Singapore.

Now, the Monetary Authority of Singapore (MAS) is looking more closely at the books of the local operations of some Indian banks to assess the credit quality of loans made from the branches to Indian companies, according to a Reuters report citing banking sources.

"There is an enhanced degree of oversight by the Monetary Authority of Singapore on Indian Banks in the recent days," S S Mundra, chairman and managing director of state-run Bank of Baroda, told the news agency.

"They are closely keeping a tab on the NPA (non-performing asset) levels and looking at the quality of assets financed."

A spokesperson for MAS said it does not comment ''on our dealings with individual financial institutions".

The Singapore regulator has in some cases suggested that banks re-classify some loans as non-performing assets, two bankers said, speaking on condition of anonymity.

"MAS is analysing the credit exposures taken by banks and is ensuring that we steer clear from lending to Indian firms they are hearing adverse reports about," said a top executive at an Indian state bank.

Singapore is a significant offshore centre for Indian finance and is the second-largest source of foreign investment flows into India, with 9.2 per cent of its population of Indian origin.