Private banks seek to cash in on wealth management

Home grown private lenders lining up offers to woo their customers with priority and privilege banking options

Foreign wealth management players have been exiting the Indian market, as they find this space a trifle small and, therefore, unviable. Sensing an opportunity here, domestic private banks are lining up offers to woo customers with priority and privilege banking options.

In the past year, Swiss banks Sarasin, EFG Group and UBS, as well as US-based Morgan Stanley, have exited their wealth management businesses in India.

Abhay Aima, group head (private banking), HDFC Bank, says the fact that foreign players are exiting India doesn't mean the business here is unviable. “In fact, there is a huge opportunity in this space. The affluent segment has been growing very well and, as the Indian economy improves, more people will become affluent and the wealthy will become wealthier. At such a time, having a relationship with this customer group makes sense for the bank,” he says.

To become a priority or privilege banking customer, one has to have a high savings-account balance. For instance, to become HDFC Bank’s Imperia Banking customer, one has to maintain an average quarterly balance of Rs 10 lakh in her/his savings account, or have an average monthly balance of at least Rs 30 lakh across all his/her savings and fixed-deposit accounts.

Apart from getting wealth management advice and having a relationship manager, a customer is rewarded with benefits such as doorstep banking and exclusive offers on debit and credit cards.

Rajiv Anand, president (retail banking), Axis Bank, says banks' increased focus on priority banking stems from the fact that the number of affluent people in the country is expected to rise; Axis Bank wants to cash in on this opportunity. “It is expected the affluent segment will grow at a 20 per cent annual compounded rate through the next five years. This is faster than the growth in other segments. Further, this segment has been profitable for the bank and, therefore, it makes immense sense to focus on it.”

A December 2013 Karvy wealth report said the overall wealth of individuals in India was expected to double from an estimated Rs 202 lakh crore to Rs 411 lakh crore through the next five years. With the number of high net worth individuals and ultra net worth individuals also expected to increase, clearly, Indian private banks don’t want to miss the bus.
AFFLUENT BANKING

• Five foreign wealth management players have exited India in past one year
• Sarasin, EFG Group, UBS & Morgan Stanley have wound up operations in India
• Report indicates wealth held by individuals in India expected to double by 2017: Karvy
• Wealth expected to increase from Rs 202 lakh crore to Rs 411 lakh crore: Karvy