The Hindu Business Line : ‘HNIs prefer equity, commercial realty’

There has been a shift among high networth individuals (HNIs) towards alternative investment products such as private equity, commercial real estate, real estate private equity and equity-linked structured products, said Mr Anup Bagchi, Senior General Manager, ICICI Bank. HNI refers to people with over $1 million investible assets.

“As the average age of people who are wealthy in India is low, they are confident and willing to take higher risk and face volatility. Therefore, they are open to alternative channels,” Mr Bagchi said. A couple of years back the preferred products were mutual funds, insurance and bank deposits.

As the ICICI group has several verticals such as SMEs, insurance, private equity, mutual funds, real estate, it is easier for the bank to offer various products to its customers.

“Our verticals such as SME, real estate, private equity, insurance and mutual funds help us service customers at low cost. Pure private banks will have to reshape their structure and strategy in emerging economies such as India,” Mr Bagchi said.

Shortage of skills

The bank has about 500 staff in its private banking division and has tied up with 80 universities to offer private banking as an elective. The bank also conducts internal certification programmes for its staff. “There is a demand supply mismatch as there is no private banking industry to supply skilled people,” Mr Bagchi said.

While all ICICI Bank branches offer private banking services, the bank is now planning to make specific private banking zones in 15-20 centres, Mr Bagchi said.

The bank has seen compounded growth in its private banking segment of 65-70 per cent in the last three years and hopes to maintain the same rate this year as well, he added.

Globally, India has seen the second largest increase in HNIs last year, at 18.3 per cent. Singapore was the highest at 20 per cent, Mr Bagchi said, referring to a study by Capgemini and Merrill Lynch.

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