Standard Chartered Bank, the largest foreign lender in India in terms of branches, says it is now aiming to grow its corporate client base by 10 per cent.
This is after a fall in its corporate book last year and flat growth in the year before.
Sanjeev Paul, regional head, commercial banking, says: “India remains a key market for us. We are making sure there is far more stringent due-diligence when we book new clients. There have been problems in the past and it takes time to come out of it. The positive thing is that the steps taken in the past 12-18 months are beginning to take shape in terms of numbers.”
Within the commercial banking business, their focus area is the midsize corporate segment, of annual turnover between Rs 70 crore and Rs 300 crore.
The bank also has the middle market segment, of companies with turnover between Rs 335 crore ($50 million) and Rs 1,340 crore ($200 million). Its third segment comprises the large local corporates, where the turnover goes up to Rs 10,000 crore ($1.5 billion).
To reach the midsize corporate segment, Paul says they're using a strategy they term as “banking the ecosystem”. He explains, “If a multinational company is sourcing from India, then you use their supply chain as your universe and finance
all their suppliers. So, the performance risk has been taken care of, as the MNC would have also done their due-diligence. And, with the MNC, we try and get into an agreement that if the supplier defaults, the MNC will stop working with them. This allows us to curtail risks.”
Currently, the bank is sourcing about 60 per cent of its new clients via this method. Despite the rise in competition and the fact that private lenders have been wresting market share from foreign banks, the latter remain confident. Paul says they are focusing on offering more value added services, such as risk-based solutions or helping India clients in setting up offshore business.
The bank has a new India chief at its helm, who after the balance sheet cleaning is focusing on growing the retail (small borrower) and corporate business. On the retail front, the lender is planning to hire about 800 employees.
In the first six months of this calendar year, StanChart India incurred a loss of Rs 167 crore ($25 million), lower than the loss of Rs 1,849 crore ($276 million) in the corresponding period last year. It has reduced exposure to certain sectors. The management has said the management of bad loans has significantly dropped and recovery is on track.