HSBC keen to acquire Indian bank

"There is this fear that if allowed to do so (to acquire local banks), foreign banks will walk away with the cream of business. But it is misplaced. What will happen is that it will lead to an scaling up of skills. Consolidation too is going to happen. The larger Indian banks will do so… and it will help locally," Eldon said.

Asked whether HSBC would be interested in picking up a stake in state-owned banks when the Union government takes a decision to divest its holding in them, he said management structure and operations of these banks were not complementary to HSBC’s functioning.

“We would not like to invest in a bank only for dividends but also for growth,” Zarir J Cama, CEO of HSBC India quipped. Eldon observed that in line with global trend in the banking industry India would also go through a consolidation phase, whereby smaller banks would merge with larger banks or form joint ventures with foreign banks.

On the bank entering insurance sector in India, Eldon explained that HSBC was a “fast follower”, in that it would want all the regulations governing the sector in place and let the industry stabilise before taking the plunge.

Eldon pointed out that the HSBC Group had global expertise in both life and non-life insurance and it would like to have a presence in both segments of the insurance business in India. “To make a beginning into the insurance sector we will function as third party insurers for new insurance companies which will soon be set up,” Cama averred.

"Over the last three years, HSBC in India has changed for the better… because of the regulatory change. We have been here since 1853, but our position three years ago did not justify our long presence… but that has changed now," he said.

On the banking scenario in the country, Eldon observed that it had changed dramatically during the last four years partly due to pro-active regulations of the central bank and also due to induction of new technology. He appreciated the two-way dialogue between the RBI and the banks for formulating regulations and other policy issues as being healthy for the development of the industry.

On new business initiatives of HSBC in India, Cama said the bank was on the threshold of signing a deal with a non-banking finance company for acquiring its portfolio of retail loans, comprising mostly of home and car loans, amounting to about Rs 40 crore. “Our consumer finance business has grown exponentially from nil to Rs 600 crore in the last one-and-a-half years,” he said, but declined to elaborate on the bank’s deal with the NBFC stating that negotiations were in the final stages.