HSBC to focus on lending to SMEs, domestic companies

Surabhi

British lender HSBC plans to focus on lending to small and medium enterprises (SME), and also engage more with domestic corporates in sectors such as renewable energy as part of its commercial banking strategy for India.

“SME lending is still a small part of our business, while we are strong in corporate wholesale banking. Our basic philosophy is that we start with SMEs close to the corporate supply chain on the sales and purchase side of corporate customers,” said Rajat Verma, Head, Commercial Banking, HSBC India, adding that the lender will look at working with them for standalone and international lending.

While credit availability to SMEs has improved over the last few years, it is still not sufficient, he noted, adding that working with these firms will require more analysis and understanding.

“Compared to larger companies that are usually managed professionally, there is less information in the public about SMEs,” he told BusinessLine .

London-headquartered HSBC has till now largely focussed on large- and mid-sized companies as part of its commercial lending business in India.

“The other part of our strategy is on the wholesale side, and it will continue to be our focus. In local corporates, we are looking to do more in sectors like renewables,” Verma said, adding that the lender has also added exposure in real estate.

“We will also focus on capital financing, which is an area of strength for us,” he said, adding that wholesale credit demand has seen an upturn in the last few quarters.

“Wholesale credit demand has been slow for a very long time, but has been higher in the last three to four quarters. I don’t know if it is a trend. In our book we our growing stronger, but we have a very small book,” he said.

Hails Bankruptcy Code

Though HSBC does not have any cases pending for resolution, Verma welcomed the Insolvency and Bankruptcy Code and said it will give confidence to banks to lend again.

“My feeling is that most of the bad news is out. Banks have to lend to projects, and if they feel that the systems are getting stronger, it will give confidence to banks to lend. Equally, promoters should also feel the responsibility,” he added.

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