FirstRand Bank, the second-largest financial services group in the African continent, entered India in 2008. Initially, it focused on corporate and investment banking. In 2012, the bank entered the retail banking space in the country and opened its first retail branch in Mumbai. In an interview with Somasroy Chakraborty, Mahendren Moodley, CEO and country manager of FirstRand Bank in India, shares the foreign lender’s future plans. Edited excerpts:
What are the key reasons for your starting retail banking operations in India?
We have built a strong track record in India with our corporate and investment banking business, where we largely focused on opportunities presented by the trade and investment flows between India and Africa. We have now identified some opportunities in the retail and commercial banking markets where we believe we can build a competitive advantage. We will start with a comprehensive product suite in commercial banking, which will focus largely on Indian companies doing business in the Africa-India trade corridor and African companies investing in India. On the retail side, we will start with a limited product suite of deposit products, safe deposit lockers and wealth management solutions and gradually build the offering. We also want to focus on building a strong non-resident book, on the back of the large NRI population in South Africa and other parts of Africa where we operate.
Foreign banks often complain that their retail growth aspirations in India suffer due to limited branch network. How do you plan to tackle this problem?
There is no doubt that a robust branch network helps in building strong distribution and aids retail growth. However, we fully understand the regulations in India and are looking to maximise the potential with what we have. Further, we are also looking at partnering with local entities to facilitate our growth. We always take a very long-term view of any market that we enter. We are also looking to leverage technology through innovative products, such as e-wallet product, which has been a runaway success in South Africa.
How many new branch licences have you applied for?
Currently, we are operating out of our flagship branch in Bandra-Kurla complex, Mumbai, and have applied for six more licences to the Reserve Bank of India (RBI) largely in towns of Maharashtra and Gujarat as well as one in Delhi.
Are you planning to bring in more capital from your parent in the near term?
We started with a capital base of $75 million and we have not had the need to augment it further. With the standard leverage on the balance sheet, we are of the view that our current capital structure should be adequate to fund our growth for another two to three years.
Have you started building your retail loan book?
We are looking at building our retail asset portfolio in a very systematic and guarded manner, learning from the mistakes other foreign banks have made over the last decade. We are looking at a phased approach to launching new retail asset products.
You prefer to describe yourself as a regional bank with a focus on Africa, and not a global bank. How will this strategy help you in the Indian market, especially on the corporate banking side?
We were very clear that we wanted to create a niche for ourselves in a very competitive Indian market. We also knew that it would be difficult for us to compete with the larger, more established Indian banks on local business alone and hence we focused on providing banking solutions in the India-Africa trade corridor. This corridor is seeing exponential increase in trade, which is expected to top $90 billion per annum (from $61 billion in 2011), and we believe we are playing a decisive role in providing comprehensive banking solutions to companies operating in the corridor.