Problems include the Reserve Bank of India (RBI) not allowing Singapore's Temasek Holdings to raise its stake in India's ICICI Bank, and State Bank of India (SBI) facing difficulty obtaining qualifying full bank (QFB) status in Singapore.

The Monetary Authority of Singapore (MAS) has taken up with RBI the issue of Temasek not being allowed to raise its stake during a recent equity-raising exercise by the Indian bank.

The paper quoted MAS managing director Heng Swee Keat as saying: "As part of a cordial and professional dialogue with RBI on various issues, MAS has written to the Indian regulator early last month, and RBI assured us that it would look into the issue."

The paper said Indian regulators have taken the position that Temasek and GIC (the Government of Singapore Investment Corporation) are both owned by the Singapore government, and that their combined stake in ICICI would cross the 10 percent limit allowed to any one party in a private bank.

GIC manages Singapore's foreign reserves. Temasek has actively invested in various banks and holds 9 percent stake of ICICI.

An MAS spokeswoman said: "There is no exception to the understanding that GIC and Temasek are separate entities, each with the right to invest up to 10 percent."

GIC and Temasek had no comment on the matter, the paper said.

CECA, which took effect last August, provides for greater access by each country's banks to the other country's financial sector.

For example, up to three Indian banks can get QFB status in Singapore. India's biggest bank, SBI, has applied for QFB status but this has yet to be granted, apparently because of SBI's inability to meet certain criteria set by MAS.

SBI now operates as an offshore bank in Singapore. A QFB licence gives a bank the right to establish up to 25 customer service locations.

Besides SBI, ICICI is also seeking QFB status in Singapore, the paper added.

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