StanChart eyes consumer finance

Standard Chartered Bank will venture into the consumer finance business, and take on global giants General Electric and Citi Financial in India.

"We propose to offer consumer credit to those who are currently not served by banks," said Mike DeNoma, group executive director (consumer banking), StanChart.

He has not foreclosed the option of acquiring existing consumer finance entities in the country in order to venture into this segment.

StanChart's entry into consumer finance follows its recent acquisition of Prime Credit in Hong Kong, which "marks our first step in getting into this line of business globally," said the bank's regional head (consumer banking) Vishnu Ramachandran.

The aim is to target customers earning Rs 3,000-4,000 a month at the lower end and Rs 200,000 per annum at the higher end.

StanChart is not alone eyeing a presence in this segment through acquisitions. GE is also understood to be eyeing acquisitions in order to expand its presence considerably in the Asian region including India, whereby it can double or triple its assets in three to five years.

While this segment is currently serviced more by loan sharks, global entities view unsecured lending to be highly lucrative. Interest rates in consumer finance range as high as 40-45 per cent, commensurate with the high business risk.

Ramachandran however added: "There is a

heart of difference in terms of being more responsive to their needs and collections." There are few national players in the market today, he added.

Novel credit card: Meantime, StanChart on Tuesday launched a credit card called Manhattan, which brings down interest rates on credit cards by as much as 50 per cent. Today, interest rates on credit cards are among the highest in the world ranging between 26-36 per cent, said DeNoma.

"There is a need to differentiate credit card users in terms of their credit performance," he added. With the launch of Manhattan, targeted at the 25-35 age bracket, the interest rate on revolving credit could fall to as low as 18 per cent, said DeNoma, depending upon the usage of the card and credit repayment.

No 10% glitch: Meanwhile, StanChart said the proposed 10 per cent cap on foreign banks' acquisition of domestic banks will not its local plans.

"We are interested in acquisitions even at that level," DeNoma said.

"We will do what we need to, in order to protect our market leadership position," he added. StanChart would be interested in acquiring a small stake in banks in geographies where it does not have a presence.

DeNoma said: "We would not be interested with a 10 per cent holding unless we do not have a geographical presence." StanChart normally takes reins of banks that it invests in , except in the case of China.