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British banking major HSBC’s decision to shut down almost half of its retail branches in India should not be seen as a “creation of the Indian economy”, Vinod Rai, Chairman of the newly-formed Banks Board Bureau, said.
Last week, the foreign bank — after a strategic review of its retail and wealth management businesses — had announced that the total number of its retail branches will come down to 26 in 14 cities from 50 in 29 cities, with much of the downsizing happening in smaller centres.
About 300 employees are likely to be affected out of a total employee base of 33,000 in India.
‘Managerial issue’Asked if HSBC’s decision to reduce business (branch rationalisation now and the earlier move to close down private banking business in the country) was a blow to India’s image, Rai replied in the negative and felt the decision should be seen more as a “managerial issue”.
“It is a perception of the way they (HSBC) would like to conduct business in India. It is not a creation of the Indian economy,” Rai said, adding that other foreign lenders too face regulatory issues from time to time.
Just as HSBC ran into problems with the Indian regulatory system, foreign lenders like StanChart had faced several issues, Rai pointed out.
These problems are not the creation of the Indian economy, Rai said, and added that the country has a “robust regulatory system”, though one-off cases like Satyam have come to light.
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