The Hindu Business Line : ‘RBI’s stance on foreign banks reasonable’

Chennai, April 21 Mr Peter Sands, Group Chief Executive, Standard Chartered Bank, and Mr Neeraj Swaroop, Chief Executive, India & South Asia, were in Chennai on a whistle-stop tour, meeting their clients and staff in the southern metropolis. The credit policy announcement of the Reserve Bank of India had just come out and it was a good opportunity to get their take on some of the measures announced in the policy.

The RBI has announced that it will continue with status quo with regard to its policy on foreign banks’ presence in India. What are your views on this?

Mr Peter Sands

Mr Peter Sands: I think that’s quite a reasonable response to the situation in the financial markets, which is in a state of enormous flux. The whole thinking about the international regulatory framework for banking and financial markets is changing. India is going to be engaged as part of that process. You can draw conclusions which are relevant to India. It probably makes sense to do it sequentially. We are very happy to work within the current regulatory framework. We are very committed to India and will continue to grow and invest significantly in building our business here.

There is a reference in the RBI statistics which points out that credit growth for foreign banks was much slower than those for other banks in the country. Why is this happening?

Mr Peter Sands: I don’t know about the aggregate numbers for foreign banks but I do know that there has been no particular change in our rate of asset growth. That has stayed roughly similar to what we have seen before. What you are talking about is a phenomenon seen across the world. In many parts of the world, international banks have either withdrawn physically, or sometimes made less capital and funding available. That’s true not just of the emerging markets, but even of markets like the UK. There’s often a simple dynamic at work — when taxpayer money has been involved, there is considerable political pressure for the money to be deployed in the home market. This has been happening everywhere. It is not, however, very relevant to Standard Chartered Bank, partly because we have not taken any assistance from the government but also because we have no home market to withdraw to.

The RBI has asked banks to lower deposit rates and lend more at lower rates. Would you see yourself doing this here?

Mr Peter Sands: Obviously we’ll be looking at our interest rates in the light of today’s announcement. We are in a declining interest rate environment. So you can expect us to be following that trend. Precisely when – is something for Neeraj and his team to work out.

The RBI has announced a relaxation in the rules governing offsite ATMs. You can now do it without a licence, but need to inform them of your plans. Your comments?

Mr Neeraj Swaroop

Mr Neeraj Swaroop: It is a welcome step. If you recall, some five years ago, this was the RBI policy. We had to inform them post-facto. In the last few years, the procedures had become a bit more bureaucratic.

On how we use this relaxation, and the exact numbers, we’ll have to work this out. We are in an expansion mode. It is a positive step. I must also compliment the RBI for removing the regulations regarding administrative licences — which was raised not just by us but the entire banking industry.

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