Covid-19 crisis: Indian banks operating in UK cautiously optimistic

Boris Johnson announced further relaxations in lockdown enforced due to Covid-19 pandemic

With British Prime Minister Boris Johnson announcing further easing of economic and social lockdown enforced by the Covid-19 pandemic— to come into effect from July 4 onwards — Indian banks operating in the UK are cautiously optimistic about business returning to near normal in the foreseeable future.

Following the UK government last week lowering the level of alert from 4 to 3 — on a scale of 5 — and relaxing social distancing rules, Loknath Mishra, managing director and chief executive of ICICI UK Plc, indicated: “We are experiencing a rise in the volume of NRI deposits and remittances.”

Speaking on behalf of Punjab National Bank (International), a wholly owned subsidiary of Punjab National Bank, Raj Kumar, head of human resources, echoed: “It seems now that the worst is behind us with systematic easing of lockdown and minor green shoots appearing in the economy.” He added: “However, the full impact of the crises will unfold in the coming quarters and remains contingent upon the pace of recovery.”  

State Bank of India (SBI), which trades as SBI UK and has the largest and longest presence of all Indian banks in Britain, sounded more conservative. “Limited free movement has had significant implications for all in the banking sector,” it said. It further stated: “SBI UK is striving to keep all operations smooth during these difficult times.”

Mishra detailed: “We have been serving and supporting our customers smoothly during the pandemic through our physical and digital networks. All our branches have been open through this period. Our focus on technology and digitally enabled platforms — both in the UK and India — has helped customers during this unprecedented time, with a majority of them transacting through an array of digital solutions. Most of our staff members have been enabled to work from home.”

Kumar disclosed: “The impact of the pandemic became discernible in early March, with lending activity becoming subdued. However the bank’s deposit profile has remained stable. The bank’s strategy of not overtly relying on market funding and having a wide customer base for garnering deposits has held us in good stead, with liquidity drying up from the market during initial days of the crises.”

He admitted: “The bank has seen a surge in requests for deferment of repayments. The bank has maintained a sympathetic and pragmatic approach. Our aim has been to guide and handhold our borrowers through these tough times.”

SBI UK claimed it has benefited from its mobile banking app YONO UK and encouraged customers to embrace digital banking in addition to online banking. The bank has two verticals: wholesale, with a balance sheet of £18 billion, which remains under the ultimate control of the parent bank in India; and retail, with a balance sheet of £2 billion, which has been essentially a British bank — SBI UK — since April 1, 2018. The bank has not had to furlough any of its 330 employees.  

Indian banks in Britain concentrate on corporate, wholesale and retail banking, and remittances to India. They include Bank of Baroda — next only to SBI in terms of turnover — Bank of India, Union Bank of India, and Syndicate Bank. HDFC has a presence to provide home loans.  

In short, Covid-19 has adversely affected Indian banks in the UK. But the impact has been at varying degrees. Unless there’s a second wave of infections and given the relatively thriving small and medium sized business community among the 2-million strong Indian population in Britain — many of whom turn to Indian banks — they could be slowly emerging out of the woods.