With leverage available, FCNR (B) scheme remains attractive: P D Singh

Standard Chartered expects strong FCNR(B) inflows from key overseas centres as RBI's latest measures boost foreign currency deposits and cross-border banking

With a strong connect with the ‘Global Indian’ community, the Indian arm of British lender Standard Chartered Bank is seeing a robust pipeline of Foreign Currency Non-Resident (Bank) or FCNR (B) deposits from key centres such as Hong Kong, Singapore, New Jersey, and the UAE, its India and South Asia Chief Executive Officer P D Singh tells Subrata Panda and Manojit Saha in a face-to-face interview in Mumbai. Edited excerpts:

 

The Reserve Bank of India (RBI) has announced several measures to attract foreign inflows, including a concessional swap window to mobilise FCNR (B) deposits. How do you see the impact of these measures? 

We have the experience of 2013, and based on that benchmark, I believe this programme should perform well. One thing worth highlighting is that the RBI has once again demonstrated its ability to respond quickly when the country requires such measures. The framework has been designed in a way that encourages banks, public-sector undertakings (PSUs) and other participants to work together, not only from a commercial perspective but also in the national interest, to maximise inflows. Across all categories, FCNR(B) deposits, loans and bonds, institutions are working hard to make full use of this window.

 

What is Standard Chartered's strategy for mobilising FCNR (B) deposits? 

Standard Chartered is the largest foreign bank in India by branch network. We also have a large cross-border franchise. Given our presence across multiple countries, we have strong connectivity with what we call the ‘Global Indian’ community (the Indian diaspora as well as clients within the country who have global ambitions). Our key centres are Hong Kong, Singapore, New Jersey, and the UAE. These markets are expected to be the primary source of FCNR (B) deposits. We are optimistic and already have a strong pipeline of deposits, although I would not like to disclose the numbers.

 

How attractive is the current scheme compared with 2013? 

It was important that the structure of the scheme was clarified, and that has now happened. With the leverage available, I believe the scheme remains reasonably attractive.

 

You have now completed a little over a year at Standard Chartered. How has the journey been so far? 

Standard Chartered has been in India for more than 165 years. It is a well-established bank with a strong brand and leadership positions across several businesses. We have a significant market share in cross-border banking, are leaders in custody services, and facilitate more than 10 per cent of the country's FPI and FDI flows.

 

My focus has been on building on these strengths and increasing our market share in cross-border business. If you look at the marquee transactions involving Indian companies going overseas over the past year, we have played a role in many of them — as an M&A advisor, financier or structuring bank. Similarly, for multinational companies entering India, we have conducted several India-focused roadshows across the world.

 

We are now seeing tangible results, with more multinational companies choosing to bank with us. Today, around one in four multinational companies in India banks with Standard Chartered. Another important focus area has been Global Capability Centres (GCCs). We have seen strong engagement with new GCCs being established in India. Overall, my priority has been to strengthen our position across corporate banking and financial institutions while continuing to gain market share.

 

What is the strategy for the retail business? 

Our focus remains on serving customers through multiple products and meeting all their financial requirements. Accordingly, we have expanded our specialised service model. We have 20 priority centres across our branches and plan to increase that number to 30. These dedicated centres allow us to provide specialised services to our priority customers.

 

Since taking charge, you have completed two major transactions — one involving the sale of the personal loan portfolio, and the other the announced sale of the credit card portfolio... 

Yes. Both decisions are part of the same strategy. We want to build deeper, multi-product, advisory-led relationships with our customers. Many of our customers are business owners and professionals with sophisticated wealth management needs. They also have cross-border requirements. Our objective is to serve customers who have broader banking relationships with us, rather than offering only a single product.

 

Standard Chartered has decided to sell its credit card business to Federal Bank. Is the bank exiting the business completely? What is the status of the deal? 

Federal Bank is conducting its due diligence. By October or year-end, we should be able to close the transaction. However, we are not exiting credit cards altogether. We will sell 45,000 cards, but we will still retain 150,000-250,000 cards for our existing customers as part of our multi-product relationships. These are standalone cards that we had, and they are probably better serviced by another Indian bank.

 

Which market segments is the bank targeting? 

We want to increase our market share in the affluent segment, the corporate segment and SMEs. Among foreign banks, we are already among the top two in SME financing. We are also the largest foreign bank in wealth and retail banking.

 

On the wealth side, apart from the large branch network, what is the key differentiator? 

It is a highly competitive market. The wealth market itself is expected to reach around $2.3 trillion by 2029. Our differentiators include our ability to design products based on customers' requirements and our advisory-led approach.

 

Our relationship managers are specially trained in wealth management and bring significant expertise. The second differentiator is our Global Indian and cross-border proposition. The third is our premium wealth offering through SC Autograph for high-end private banking and wealth clients, including discretionary portfolio management services and other investment solutions.

 

We also provide access to around 600 mutual funds and a full suite of investment products. We believe we offer customers a complete bouquet of products, supported by high ethical standards. That is where institutions like ours differentiate themselves from smaller players. India is among Standard Chartered's top five wealth markets globally.

 

Do you see Standard Chartered's role as being restricted to M&A advisory, or will the bank also provide financing? 

We do both. Over the past year, we have advised on transactions as well as provided acquisition financing. As I mentioned earlier, we have participated in most of the major cross-border transactions since I joined. We are among the top three players in M&A advisory. We have also financed several acquisitions during the past year.

 

The West Asia crisis has continued for almost four months. How have your clients been affected?

 

India’s ability to manage the disruption has been better than that of many comparable countries. The government’s decision not to pass on the energy price shock to retail consumers helped preserve growth and stability. That has supported the long-term viability of businesses. There have been second- and third-order effects. Some were expected, while others emerged sooner than anticipated. One positive factor was that inventories were initially valued at older prices, so companies did not face immediate pressure on their financials. The impact is more likely to be visible as inventories are replenished at higher costs. Overall, we were able to manage the initial phase well. Prioritising availability over price in the early stages also helped. That is not to say companies and their suppliers were unaffected. There were direct and indirect impacts, but nothing that appears unmanageable or difficult to recover from.

 

How did Standard Chartered support clients during this period?

 

Initially, the main challenge was supply chain disruption. As an international bank, we were able to help customers reroute supply chains and restructure trade transactions so that their international business was not significantly affected. Several cross-border transactions, particularly acquisitions by Indian companies overseas, continued without disruption. Some transactions were delayed by a few months, but overall the impact was limited and many deals were completed successfully. We also supported clients in managing currency risk, commodity price risks through our offshore capabilities, and financing requirements, including working capital, short-term funding and access to international capital markets. I believe this reinforced our position as a bank that supports its customers through different market cycles.

 

While many Indian companies are investing overseas, domestic private capex has not picked up significantly. What is the reason? 

Many of these acquisitions provide Indian companies with access to overseas markets, technology or customers. The manufacturing activity often remains in India or is brought back to India after the acquisition. Companies may acquire technology, customer access or established brands, all of which eventually support domestic investment. We are also seeing green shoots in private capex here

 

Which sectors are seeing those green shoots? 

We are seeing them in manufacturing and semiconductors. Some investment is also linked to infrastructure and storage. A significant part of this investment is being led by multinational companies.