HSBC says no to insurance in India

He said that the group wanted absolute control in the insurance business and "absolute control means more than 50 per cent equity stake for the group."

The Insurance Regulatory Bill (IRA) which is awaiting parliamentary approval proposes a combined foreign equity participation of 26 per cent for overseas firms, Non-Resident Indians (NRIs) and overseas corporate bodies (OCBS) in the sector once it is opened up.

"Under the current proposed structure, we don’tintend to enter the sector," he said. HSBC group’s insurance businesses are co-ordinated globally, but deliver products and services principally through the group’s Commercial banking subsidiaries and are administered by its insurance companies and their subsidiaries.

In India, the group has a large presence in investment banking, private equity, securities and private banking, and trade services. "We have plans to enter the mutual fund industry towards the end of this year. But we are looking at the options of introducing the same under the investment banking vehicle or through a separate asset management company," he said.

Globally, HSBC Asset Management handles portfolios for institutions, corporate clients and high net-worth individuals and provides investment vehicles such as unit trusts and mutual funds, for retail investors wishing to invest locally in European or other global markets.

"HSBC is researching the best way of entering the mutual fund business in India and it has to be separate fromour commercial banking operations," he said. HSBC group currently has three separate operations in India- private banking, investment banking and securities business.

However, Cama said the group had not yet decided on the type of fund HSBC would be launching. "We are looking at various options, whether the fund should be equity based or government securities based," he said.

Cama said mutual funds was a very important business worldwide for the group and also complemented the firm’s personal banking business. He said in India too the group expected the mutual funds business to complement its personal banking operations.

The deputy CEO said that worldwide, the asset management company managed funds to the tune of 50 billion dollars. Currently, HSBC operates mutual funds in Far East, Europe with special focus in United Kingdom.

Referring to synergies of the mutual fund business with the group’s other operations, Cama said, "mutual funds will offer opportunities to our professional and high net-worthclients as well as our retail banking customers."

The rules stipulate a firm to set-up an Asset Management Company (AMC) for starting mutual fund business and for foreign firms, a seperate permission from the Foreign Investment Promotion Board (FIPB) is also required.