HSBC India chief Naina Lal Kidwai on Thursday said that the bank's consumer retail portfolio is likely to remain flat this year, after growing by 15 per cent during the last financial year.
The bank is also expected to put plans to set up a non-banking finance company on the back burner. HSBC had sought permission from the Reserve Bank of India to set up a finance company, but is yet to receive a licence from the regulator.
"We have not yet received the licence from the regulator which, in a sense, has been a blessing for us as we have realised that consumer asset business is not working for others as well as for us," Kidwai said.
The statement comes amid concerns expressed by the government and the RBI about risk-aversion by foreign and public sector banks.
While public sector banks have managed to maintain a growth of over 25 per cent during the year up to February, private and foreign banks have seen their growth in loan books shrink to single-digit rates on a year-on-year basis, as against over 20 per cent at the end of September, when the credit crisis intensified.
The government and the central bank have been prodding banks to lower interest rates, something that foreign players have refrained from doing so far. In recent months, these banks have seen a steep rise in delinquency levels following the huge spurt in lending during the period up to March 2008.
Kidwai, too, said that asset impairment in the consumer assets had gone up and many cases of willful defaults had been noticed.
She identified the insurance and retail broking business as growth areas.
HSBC has entered into a tie-up with Canara Bank and Oriental Bank of Commerce to float a life insurance company, which on Thursday reported a gross premium of around Rs 300 crore (Rs 3 billion) during the nine-month period ended March 2009. The life insurance company started operations in June 2008.
Kidwai also said that the bank would link issuing of credit cards and loan disbursals to the Credit Information Bureau (India) Limited data.
"The strength of CIBIL data is that, when the total borrowing of the individual in known, it is possible to lend on the basis of individual's capacity. We could start such a thing in India in the next two years. In the rest of the world, there are blacklisting features for defaulters and the fear of getting blacklisted is real," Kidwai said.
When asked what is her expectation from the Reserve Bank of India's credit policy which is due next week, she said that everyone desires interest rates to come down further. But she stressed that it is difficult to drop lending rates before deposit rates are brought down further.