HSBC to pump in Rs 1,000 cr

Dollar game hots up on bank street.

The Hongkong and Shanghai Banking Corporation (HSBC) will infuse $243 million (approx Rs 1,000 crore)in its Indian operations to support strong growth prospects in retail and commercial banking in 2005.

HSBC is also looking at establishing a wholly-owned non-banking finance company (NBFC) for driving its retail growth.

On top of a $150 million capital infusion this month, HSBC will retain its remittable surplus for 2003-2004 of $ 30 million, plus an expected $ 63 million for the current financial year.

This would boost the bank's capital adequacy ratio, said HSBC group general manager and CEO of India operations, Niall S K Booker. HSBC India's net profit increased by 35 per cent in 2004.

The capital adequacy ratio of HSBC's Indian operations will rise to 13.5 per cent after the infusion of $150 million, from 10 per cent at the end of December 2004.

HSBC last infused capital of $ 150 million in its Indian operations in March 2003. The capital infusion will take the total capital of the bank's India operations to $ 600 million.

With Indian corporates going global and requiring huge funds, the $ 243 million capital infusion will take care of HSBC's requirement for the next 12-18 months, said Booker.

The bank is planning to set up an NBFC to widen the distribution set up. This is in line with its focus on retail growth. Its retail operations have seen immense growth and contribute to 42 per cent of total loans, up from 27 per cent in 2002 when Booker took over.

"We are looking at it from the customer perspective," said Booker. The minimum capital requirement for setting up an NBFC is $ 50 million.

HSBC 's home loan portfolio grew by 85 per cent to Rs 3,200 crore on December 31, 2004. HSBC India's total assets book at the end of December 2004 stood at Rs 27,000 crore, the bank's area financial controller, Anurag Adlakha, said.

Booker said HSBC India had seen a decline in non-performing assets (NPAs) with delinquencies in home loans being less than expected and in credit cards "much below" double digits.

HSBC would open its 40th branch in Nagpur and had approvals for branches in Indore, Mysore and west Delhi, said HSBC India Deputy CEO Naina Lal Kidwai.

HSBC India added 750 people in 2004, taking the total employee strength of the group in India to over 12,000 at the end of December 2004.

More in the kitty

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• With Indian corporates going global and requiring huge funds, the cash infusion will take care of HSBC's requirement for the next 12-18 months
• Around $150 mn will go towards boosting retail and commercial banking in 2005
• HSBC last infused $150 million in its Indian operations in 2003. The capital of its India operations will go up to $600 million
• HSBC is looking at establishing a wholly-owned non-banking finance company to drive retail growth. The minimum capital requirement for setting up an NBFC is $50 million