The Hindu Business Line : HSBC has big plans for India — Insurance venture, NBFC foray, outsourcing centre on cards

According to Mr Stephen K. Green, Group Chief Executive, HSBC Holdings Plc, the Group is interested in launching a separate insurance venture in India as part of its global financial service business.

Talking to a group of visiting journalists from India and Philippines earlier this week, Mr Green said the extent of investments and the nature of ownership of the insurance venture would depend on the regulations prevailing in the country.

Mr Green, who is based in London, was in Hong Kong, to participate in an informal meeting with HSBC shareholders ahead of its AGM in London.

"We will invest to the extent the regulatory environment allows us to do so. Capital is not a constraint to us," he said, replying to a question on whether HSBC would be happy with the foreign investment cap in the insurance sector.

FDI in insurance is restricted to 26 per cent in India, although there have been talk about raising it to 49 per cent.

The Group is interested in both life and general insurance businesses, he said.

HSBC would like to follow the bancassurance model, which has proved successful in Hong Kong and Latin America markets, said Mr Michael R.P. Smith, President and CEO, The Hongkong and Shanghai Banking Corporation Ltd.

Currently, insurance business accounts for 10 per cent of HSBC's revenue worldwide, he said.

Though there are more than a dozen insurance companies fighting for bigger market shares in India, Mr Smith thinks that this country with a large population holds tremendous opportunities.

HSBC would also set up a non-banking finance service company in India to tap the growing consumer finance market. This would be a 100 per cent HSBC owned venture.

The Group, which has already committed to bring $180 million to India in the current year, would be infusing more capital to the country for its expansion plans which include the proposed NBFC, setting up of a new outsourcing centre and opening more branches.

On HSBC's investments in UTI Bank, Mr Green said it is comfortable with its investments. "We are aware that some policy discussions are going on in India and depending on how those discussions crystallise, we will take a decision on our investments."

HSBC holds 12.5 per cent stake in UTI Bank. As per the RBI guidelines, the bank has to bring it down to five per cent.

Indian operations account for around one per cent of HSBC's global revenue. Mr Green said at the moment the profit might be modest. But that is not the criteria. "We operate in 77 countries and the contribution of many countries to the bank's profit might be one or two per cent. In the case of India, we believe in the growth opportunities in the country.

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