What's the next step for UBS?

UBS AG's plans to open a banking branch in India are being held up as the country's central bank seeks clarifications from Europe's largest bank by assets.

“In-principle approval given to UBS has been put on hold pending investigation,” Alpana Killawala, spokeswoman for the Reserve Bank of India, said in response to a report by the Mint newspaper.

The paper reported that the Reserve Bank of India had suspended its approval for the branch because of UBS's reluctance to cooperate with local authorities in scrutinizing a global chain of money transfers linked to an Indian national, citing people it didn't identify.

UBS refused to comment on the Indian newspaper article. “Our application for a bank branch license is pending,” Mark Panday, the Hong Kong-based spokesman for UBS, said in a phone interview, without elaborating.

UBS, which doesn't have a banking branch in India, is seeking to join Citigroup Inc. and France's BNP Paribas SA, which have been increasing investments to benefit from an economy which is expected to grow at 9 percent for the third straight year.

BNP last invested $147 million to expand operations in the world's fastest-growing major economy after China.

Will UBS eventually break into the Indian market?