South African banking group FirstRand is firming up plans to make a foray into India once a framework for opening up the banking sector to new entrants is put in place, according to a media report.FirstRand chief executive officer Sizwe Nxasana told Business Day that although it was still 'early days', he saw the possibility of FirstRand's operating units, such as First National Bank and Wesbank, benefiting from opening up of the Indian banking sector.
In this regard, he said the group would leverage the experience gained in the Indian market from FirstRand India, which has been involved in trade finance and commodities trading in the country for the past two years now.
"There are conditions, part of the process (of getting a foothold in India), but clearly India has recognised the importance of bringing more foreign banks into India to grow their economy and to also meet their objectives like expanding infrastructure and bringing more people into the banking sector," Nxasana said.
Like the South African government, India has also adopted a strategy of making it mandatory for banks to provide facilities to cover the large unbanked segment of the population.
"There is a paper on the issue and we are part of that consultative process," Nxasana
said. "Obviously this will improve opportunities for us as a foreign bank operating in India," he added.
Nxasana was not daunted by the view of analysts that India, as a member of the Brazil, Russia, India, China grouping, poses both opportunities and threats, particularly because the barriers for an entry into the banking sector were tough.
He also did not subscribe to the perception that Indian consumers have a conservative approach toward opening banking accounts -- preferring to hold on to their cash or invest in gold -- which some analysts claimed would make the task of staying afloat in the highly competitive sector difficult.
Nxasana said the group would first have to evaluate the business and financial merits of converting its Indian unit -- currently operating as a branch -- into a subsidiary to comply with Indian regulations before it expanded into the retail banking business there.
"But I see more opportunities since we already have FirstRand India, which currently has 35 people," he said.
