Leading the pack is Bank of Baroda which is pulling out all stops to ensure that its Brussels branch becomes the focus of all Indian banks for their international banking business in Europe. Senior BoB official N Balasubramanium said: "The objective is to improve the bank's fee-based foreign currency income. To this end, BoB has invested close to $400,000 to update the systems in the Brussels branch." The technical revamp includes the latest AS/400 computer architecture for fast and real time business operations.

"To start with, we want to ensure that the business which BoB used to route through other European banks, should now be handled exclusively through our Brussels branch," said Balasubramanium.

In its role as the correspondent bank inEurope, BoB Brussels is now in the position to maintain other banks' deposits under demand and time deposits and it can now be a syndicate partner in the banks' overseas lending programmes. Using real-time payment service through `TARGET' (Trans-European Automated Real Time Gross Settlement Express Transfer), BoB Brussels can now effect payments in and remittances from Europe, in euro or in any other international currency.

BoB Brussels is a full-fledged, multi-currency overseas branch of Bank of Baroda, operating from the headquarters of European Union. Among the Indian banks, Balasubramanium expects some competetion for European business from SBI and Bank of India which might lead to minor price undercutting, but the quality of services provided will remain a key strategy. Bank of India has also decided to get active in correspondent banking business to push profits growth from its international operations. Bank of India's New York, London and Tokyo branches will take the lead in offering the service.Correspondent banking offers reasonable margins with little risk, said a senior executive from Bank of India. At present, most of the correspondent business of Indian banks are bagged by large US banks like Bankers Trust and Chase Manhatten.

Most of the smaller Indian banks do not have overseas branches and their transactions involving overseas business, like clearing operations, is serviced through their correspondent bank. Sources in BoI confirmed that the bank will approach other Indian banks for correspondent banking business by February, after the major technology upgradation currently on in BoI's New York branch is over. The London branch of the bank is already active in offering correspondent banking services to a host of Indian banks.

Foreign banks had begun pitching hard for Indian banks' correspondent banking business in euro account months before the new currency was launched. Officials of these banks have been making presentations to Indian banks across the country.

Correspondent bankingrelationship on Euro account has taken strategic importance for global banks because, once secured, this account will in effect replace scores of correspondent banking relationship that Indian banks at present maintains for each of the Europen Union countries. Correspondent banking relation with any of the major global bank with a clearing account with European Central Bank, the central bank for the ECU, is essential for Indian banks if they have to do business originating from these countries.