The Hindu Business Line : For banks, there is big catch in smaller towns too

Mumbai, April 6 Banks are now casting the net wider, angling for crorepatis in smaller towns, baiting them with private banking and wealth management services. As banks expand into smaller towns, they find that several small businessmen and entrepreneurs fit into their definition of high net worth individuals, say bankers.

Many of these towns are seeing new wealth being created due to reasons such as the stock market gains and surge in exports from auto ancillary, textile and leather industries. Some small businessmen have hit pay dirt by selling off their companies to private equity firms and a few landowners have found themselves with surplus cash after selling off their land to corporations wanting to set up SEZs.

While big cities such as Mumbai, Delhi and Bangalore continue to contribute about 60 per cent of the HNI business, other towns that are becoming significant markets include Chandigarh, Coimbatore, Vishakapatnam, Guwahati, Bhubaneshwar, Jaipur, Nashik, Kolhapur, Ahmedabad, Chandigarh, Jalandhar, Ludhiana, Vadodara and Surat.

According to a research conducted by HSBC and National Council for Applied Economic Research, the percentage of HNI population (earning approximately Rs 4.5 crore per annum) would increase from 0.8 per cent or 9 million people in 2006 to 1.7 per cent or 20 million people in 2010. Mr Gagan Arora, Vice-President and Segment head- Citigold, Citibank India said that the wealth management business was seeing higher growth in non-metro towns than the metros. “The growth in terms of the number of new clients in non-metro towns is around 40 per cent, while in the metros it is around 25 per cent. We have started reaching out to smaller towns in the past two to three years,” said Mr Arora

According to Mr Kanwar Vivek, General Manager, Wealth Management, ICICI Bank, “The latent demand was all there. It is just that customers from the smaller towns are now getting classified as HNIs as banks and boutique broking firms are setting up offices in these areas.”

Mr Ramnath Krishnan, Managing Director and Head, Private Banking, HSBC, said, “We see a lot of opportunities in towns such as Ludhiana, Jaipur, Chandigarh and Ahmedabad.”

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