Bank Negara Malaysia has approved the issuance of a banking license to a locally-incorporated Indian bank.

The bank is 40 per cent owned by Bank of Baroda, 35 per cent by Indian Overseas Bank, and 25 per cent by Andhra Bank.

The license is a reinstatement of a commercial banking license to an Indian firm, which previously operated in Malaysia but was affected by the 1973 rule that prohibits foreign firms from operating in the country. The issuance of the new license is in line with the present bilateral agreement between Malaysia and India, signed in 2003, and the liberalisation initiatives which begun in early 2009.

Malaysia has been opening up to foreign business in the wake of the global financial crisis, which saw international firms shifting toward Asian soil. Besides developing a solid banking industry, Malaysia is also working at being recognised an international centre for Islamic finance.