Post the acquisition of consumer finance company, Prime Credit in HongKong, Standard Chartered Bank is looking at small loan market in the SEC (socio-economic classification) ‘C’ segment of the country, said Christopher Low, CEO, StanChart, India. The bank plans to offer loans of Rs 10,000 or so to finance products, such as television sets and home appliances.
Today, most people in this segment go to pawn brokers and pledge their jewels or to money lenders, who charge 60-70 per cent interest, he said.
“We will be able to offer a more transparent system and even if the rates are a little higher, it will be lower than 60-70 per cent,” Mr Low said.
The changing demographics and the rise in demand for brown and white ‘aspirational’ goods in this segment make it a good market, he said.
At the same time, StanChart will stick to its policy of ‘ethical selling’ (which also makes business prudence) and will not offer loans to people who cannot afford to give it back, Mr Low said.
A lot of financial institutions globally indulge in misselling. Banks should have a financial code of conduct of not engaging in that and overheat markets, he said. StanChart has big ambitions for India, the third largest geography for the bank’s operations, he told FE. The focus of this product interestingly, will not be on metros.
“We have plans to become a leading bank in India over the next few years,” he said. India contributed 12 per cent of pretax profits last year and “we believe we have the potential to expand,” he said.
The ANZ acquisition has given it a larger base and the previous few years of good growth and performance has given it ‘new confidence’ to expand, he said. Last year, the bank saw a growth of 52 per cent in pre tax profits.
Besides, new opportunities are opening up and “India today is clearly a part of that,” he said. Apart from the inorganic growth - the bank has been talking of acquisitions - the bank is also looking at aggressive organic expansion. Over the next 12 months, it plans to add 2,000 sales people and around 100 direct sales agents. It currently has over 2.5 million retail customers and the top 300 corporate customers.
On the wholesale banking side, financing infrastructure - including airports, ports, roads, hospitals - would be a focus area. It is also eyeing new business areas such as biotech and pharma for investments.
The fastest growth area in retail business is expected to be mortgages and wealth management. The bank’s other areas are cards and auto finance.