SocGen plans NBFC to boost private banking

The global financial turmoil would not affect Societe Generale’s plan to set up a separate non-banking finance company (NBFC) in the country. SG Private Banking is about to file for an NBFC licence with the Reserve Bank of India (RBI) and would use it to lend to its own clients.

“The NBFC gives us greater flexibility in functioning. As a bank, we can lend Rs 20 lakh per individual, while there are no such restrictions with an NBFC. Retail and broking businesses can be affected by the ups and downs in the market, but private banking does not get affected as high networth individuals (HNIs) continue to get high salaries and earn profits.

However, on the individual risk profile, the asset class keeps changing,” said Nipun Mehta, head and executive director, SG Private Banking India.

The company had announced its plans to set up an NBFC last year.

“Since there were some regulatory changes regarding the capital adequacy norms, we needed to re-access our strategy. We are now ready with all the details and will approach RBI,” Mehta added.

It will be applying for a discretionary portfolio management service (PMS) with the Securities and Exchange Board of India (Sebi) soon, besides launching regular advisory on managing individual wealth and will offer mutual funds, investments in equities. “We are targeting around $1 million per client,” said Mehta.

“Globally, established products are now coming to India. This space will see a significant amount of opening up,” he added.

When asked about the effect of the global financial crisis on future business plans, Mehta said there would not be much impact. “The entire credit scenario has changed so fast that everyone needs to look at the business angle. But fortunately our plan has been to pursue a measured approach, so there has been no major alteration in our plans,” Mehta said.

“SG Private Banking is always looking for opportunities,” said Nipun when asked if he was open to inorganic growth.