HSBC Holdings Plc is taking active steps to challenge the positions of private banks in India, anticipating that the growing pool of affluent clients and globally integrated citizens of the country will form the basis for its next phase of development. The bank is deepening its presence in smaller towns.
The London-based lender is focusing on three areas in one of the world's fastest-growing major economies: wealth management, transactional banking, and what HSBC India head Hitendra Dave calls 'globalness.' It uses its international network to serve clients whose affairs and assets span various borders.
Hitendra Dave, HSBC's head in India, stated in an interview that the bank's ambition is to become one of the top four or five private banks in India by 2030 regarding wealth management.
Competitive Landscape and Market Conditions
This growth strategy places HSBC in more direct competition with major local rivals such as ICICI Bank Ltd. and Kotak Mahindra Ltd. for a share of India's rapidly expanding wealth fund. Nevertheless, the market presents a complex environment as local banks scale up, and firms founded by senior bankers compete for clients and talent, which drives up compensation for client relationship managers.
HSBC, Standard Chartered Plc, and Barclays Plc form a relatively small group of foreign banks developing their wealth management divisions in India, despite some global lenders scaling back operations. For instance, Citigroup Inc. sold its consumer banking division in India to Axis Bank Ltd., and Kotak agreed to acquire Deutsche Bank AG's retail and investment divisions in India this year. Furthermore, foreign lenders face stricter branch opening restrictions compared to local competitors, hindering the establishment of nationwide networks.
Expansion Plans and Regional Focus
This push from the British lender comes against the backdrop of Group CEO George Elkhdery's announcement of plans to increase investment in India with heightened focus on affluent clients. The firm intends to expand its network to 46 branches in 34 Indian cities over the next two years, increasing the current number of branches from 34, allowing it to reach smaller settlements. New locations mentioned include Bhubaneswar in the east, Rajkot in the west, Jalandhar in the north, and Mysuru in the south.
Hitendra Dave emphasized that the bank is building a wealth franchise outside of India's megacities, pointing to the rise in wealthy individuals in smaller centers. HSBC's private banking typically targets clients with assets of at least $2 million USD. Dave described the next generation of Indian wealthy individuals as increasingly 'global,' as more Indians study and work abroad, establish international businesses, and invest worldwide. He noted that the bank can be particularly valuable to clients whose financial lives, businesses, and assets cross borders.
Results and Additional Tools
The company's expansion is already yielding results. HSBC recently became the largest lender to the extensive Indian diaspora under a special currency swap program, channeling $10.9 billion from GIFT City over three months. ICICI Bank ranked second with $8.4 billion. HSBC also utilizes premium credit cards and large mortgages to strengthen ties with affluent clients. Annual fees for premium cards can reach 110,000 rupees ($1,147), and the bank's mortgage portfolio has tripled over the last four years.
According to the bank, as of March 31, outstanding mortgages grew by 25% year-on-year, reaching 257 billion rupees, driven by a focus on larger loans for elite housing. Transactional banking is another pillar of the strategy: Dave reported that the lender assists companies in processing settlement payments, executing currency transfers, distributing dividends, and managing liquidity.