Sanjiv Bhasin, Chief Executive Officer (CEO) of AfrAsia Bank, opens up with us to explain the performance of his banking entity and the overall banking sector. He also talks about the tax treaty between Mauritius and India and believes that the global business sector is not really endangered.

It’s going to be a year in a couple of months since you took command of AfrAsia as CEO. Were you satisfied with the actual performance of the bank before you joined?
The year has registered a very encouraging performance. Our profit after tax increased to Rs 433 million from Rs 175 million the previous year. More importantly we have had a robust growth in all business lines improving the quality of income and the results are after we have taken, in our opinion, the right level of provisions for impaired assets. Our deposit base has grown by 20% reflecting that our valuable clients continue to believe in our strength and approach to business.

The board of directors of AfrAsia approved a three year strategic plan to uplift the bank’s performance. How much still has to be done in this strategic plan?
We are in an evolving market environment and in a very demanding sector. Technology is going to be a big player in the industry. The three year strategic plan is very much embedded in our operations but we must achieve it by staying in touch with the customers, the banking environment, global developments and this is ongoing.

Talking about regional expansion, you now have two offices in South Africa – in Johannesburg and Cape Town. Is regional expansion not part of your ambitions?
I don’t think we need to be present in various geographies to expand our business. What we are looking at is identifying clients who offer us the opportunity to grow. The clients that we target in Africa are those who are trying to expand their presence either in their home country or outside and we would like to be associated with them.

Also, I don’t think we are limited to any jurisdiction anywhere. Development in technology will enable us to keep in touch with clients without a physical presence. And we really want to capitalise on that and we will.

The Bank of Mauritius has always made this remark that banks should review their service fees. Do you agree with this and do you think the legal framework in Mauritius is adequate to regulate the local banking sector?
I am not very sure that the Bank of Mauritius regulates the fees of banks. But competition warrants that fees of banks for their services should be as low as possible. Talking about the legal structure in Mauritius, I think it is very robust. Nobody can claim that the legal structure here is not up to the standard or inadequate. For example, you can see the performance of the offshore sector which is booming.

The Double Taxation Avoidance Agreement (DTAA) between Mauritius and India got a huge blow. Will the banking sector be able to sustain this amendment?
I have a different point of view on this issue. I think that the amendment of this DTAA was known since before. Now it will be ‘grandfathered’ for two years. I think we should be tapping the new opportunities under the amended treaty.

But we should also not ignore the fact the larger portion of the funds flowing into India is debt and not equity. And I am of the view that this portion of the market will improve significantly.

And on the other hand, Mauritius has tax treaties with other countries on which it can still bank on. I can’t see how the India-Mauritius treaty will cause any harm in the long run but we need to take actions now and look for opportunities.

But can we deal with the situation in the short run?
Of course we can because I strongly believe that we have the best talent working in the sector. The local offshore sector has a wealth of experience gained over the years. So we have the right people, the legal structure and an effective jurisdiction, thus there is no doubt that we will maintain or better our performance in this area.