Branch Licensing Should Be Easier, Says Hsbc Chief

Branch licensing should be made more liberal for foreign banks operating in India as they can offer a wide range of services, if the government removes the constraints faced by them."

While stating this at a press conference, David Eldon, chief executive officer, HSBC, admitted that India allows wider leeway to foreign banks in comparison to countries like Malaysia. However, foreign banks will enjoy a level playing field, along with the Indian banks, once they are licensed to operate in the country.

Eldon, chairman-designate of the bank, was appreciative of the economic performance of India, which had largely arrested the currency turmoil of south-eastern countries.

In HSBC's assessment, India falls under the second most-important group of countries in terms of profit earning potential, size and other parameters. The first group comprises Hong Kong and China, the UK, Brazil and the US. HSBC will accord priority to these countries while making investment decisions. India is in the second category, called the major group. Eldon feels that India should soon graduate to the large group. Nevertheless, India remains a core country for the HSBC group.

Eldon ruled out any organisational restructuring at present and even a fresh dose of voluntary retirement scheme (VRS) is not on the cards. VRS offered in the recent past did not evoke reasonable response. HSBC is now saddled with 3,000 employees with average age around 40 years.

HSBC is putting on hold its plans of fresh recruitment. The bank wants to employ more people, who are young, bright and can adapt to the new situation in a better way, said Eldon. The bank will concentrate on ensuring better returns from its investments. In that endeavour, the branches will be relocated. But he made it clear that unlike other foreign banks HSBC would not close down any branch. The present strength of 22 branches will go up with a new one coming up at Gurgaon.

HSBC has maintained a capital to risk-weighted adequacy ratio of 10 per cent, while its capital base with tier-I & tier-II together remains at Rs 1,000 crore. The total financial base of the group, as shown in the balance sheet, stands at Rs 10,000 crore.

However, HSBC Holdings plc will create a unified brand for the HSBC group, using HSBC and the company's hexagon symbol as its marketing name everywhere it operates.

This initiative is designed to achieve full recognition for HSBC as one of the world's largest and most-successful financial services organisations.