Capital a constraint for subsidiaries: StanChart
Standard Chartered Bank said on Monday onerous capital requirements were preventing foreign lenders from converting themselves into whollyowned subsidiaries (WOS) for local operations. The bank, which has 100 branches in the country, was not looking to decrease its presence as many of its foreign bank peers had done, a top executive said. “It (converting into WOS) is very capitalexpensive. If you subsidiarise, the capital that is put into the country is dedicated from the Tier-I capital of the parent,” the bank’s country chief executive, Zarin Daruwala, told reporters when asked about the impediments to conversion into WOS. She said the government had made necessary changes to the taxation structure, which was long considered as a big impediment preventing the lenders from operating as WOS. Daruwala, however, declined to comment when asked about the bank’s strategy vis-a-vis operating as a WOS. Two foreign banks, Singapore-based DBS Bank and State Bank of Mauritius, have opted to establish WOS in India. Korea’s Woori Bank, which has been operating through branches, is also graduating to form WOS in India. In order to tide over the issue of lack of a go-ahead for branch expansion, Daruwala said the bank was adopting the digital medium as an outreach tool and making investments in the same. The bank is focusing on the more resilient retail segment for loan growth in the country. Without giving a timeline, she declared it wanted to up its contribution to the loan book to 40 per cent from the present 29 per cent. The retail segment has grown 20 per cent in the last two years and the bank expects to continue with a similar trend in the future as well. The bank’s credit cards in use had grown three times in the last two years, she said, adding it did not want to increase the unsecured book from present 6 per cent levels. Standard Chartered, meanwhile, appointed Bollywood actor Anushka Sharma as its brand ambassador to target the increasing young working customers.