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‘There’s room for all in retail loan market’

Standard Chartered (StanChart) is one of the few multinational banks for which India is key market in wholesale and retail business. It has consolidated its leadership among MNCs with Citi exiting the retail business. The bank is also growing its headcount in its global business centre in India, and its CEO Bill Winters is expected to hold a top management meeting here early next year. In an interview with TOI, cluster CEO (India & South Asia) Zarin Daruwala speaks of the bank’s plans for India…
How was the previous year for StanChart India?
We are the third-largest contributor to StanChart’s revenue and profits after Hong Kong and Singapore. StanChart India generated a profit before tax of Rs 6,480 crore for FY22, which excludes international business originating from India.
Unlike other MNC banks, we do all retail business, excluding auto loans, and have a large book. Our SME book is close to Rs 30,000 crore and covers a large part of our priority sector requirements. We also do microlending through microfinance institutions. We have a sizeable NRI business as we can provide customers one view across accounts in Asia, the Middle East and Africa. We have a robust wealth management offering and have built a new remittance platform for NRIs. We have also raised FD rates on non-resident deposits to attract more funds.
You had an opportunity to grow retail by acquiring Citi’s portfolio…
We evaluated it, but felt we needed a return on tangible equity (ROTE) of 10%, which perhaps the price may not justify.
At one time, foreign banks were keen on expanding their local presence in India. Will retail banking be a play for only domestic banks?
Even now, there are restrictions on branch licenses. All 43 foreign banks put together get 15 branch licences a year. We have 100 branches in 40-plus locations, and these cities cover 70% of the transactions in India.
Subsidarisation is expensive as the capital gets deducted from the parent’s tier-1 capital. Today, thanks to technology, even if you have a few branches, you can cover the city quite well. Domestic banks dominate retail, but there is space for everyone as the retail space is growing. StanChart is a well-recognised brand, so I do not have to sell the proposition.
What is your plan for deposits now that the RBI is in a tightening phase?
Our CASA (current & savings account) deposits grew 20% last year, and we will continue to grow this. We have invested a lot on the corporate side in the solutions we have provided for current accounts. Our microservices architecture can handle 1,000 transactions per second, which will be one of the fastest in India. So many unicorns (startups valued at over $1 billion) with small value high-frequency transactions come to us. Banks like SBI have all the branches, my USP (unique selling proposition) is solutioning. We have a very big catalogue of APIs (application programming interfaces – software that connect IT systems of banks and customers), and India contributes 85% of the corporate banking API volumes.
What is your strategy for technology? Are you doing things in-house, partnering with fintechs or buying them?
We partner with fintechs and we also service them. We use in-house IT solutions. SC Ventures, where I am a board member, helps incubate new entities. Our pure digital bank in Hong Kong was co-created with SC Ventures, and now Singapore will be launching its pure digital bank. In Indonesia, SC Ventures has helped partner Bukalapak, an e-commerce company, for financial inclusion.
What about corporate loans?
We are seeing good momentum on the corporate side, where we are very strong, particularly in sustainable finance. We see a promising pipeline of transactions. We were the first foreign bank to set up shop in Gift City, and we have crossed a $1-billion balance sheet and are the only foreign bank to advise the IFSC Authority. The other place where we are very strong is trade finance and have the largest market share in products like LC advising. We have been the number one banking in foreign currency and rupee league tables.
The RBI has hiked rates by 140 basis points and is likely to raise again. Do you see that increasing stress on borrowers?
As of now, we do not see that at all. If we look at our bounce rates or the 30 days past dues, we are not seeing that. We are seeing almost everything come back to pre-Covid levels. I do not think a 2% increase in interest rates will make that much of a dent. If it rises by, say 4%, then yeah.

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