Mumbai: Mumbai: British lender HSBC expects the foreign currency non-resident (FCNR) deposits it mobilised under the Reserve Bank of India's special swap facility to act as a force multiplier for its wealth management and retail banking businesses in India.
The inflows, which at $14.5 billion were second only to the $17.88 billion that ICICI Bank mobilised under the special FCNR (Bank) facility, give new resources to lend and expand the wealth management business, said Sandeep Batra, its managing director and head of wealth and personal banking in India.
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The leverage option of up to 19 times - depositors could borrow 19 times the money they deposited - that the bank offered helped attract depositors, Batra told ET in an interview. Half the deposits were for five years.
"We have a plan in place, and we are doubling down on whatever capability we need to develop," Batra said. "FCNR (B) is one catchment...we are also opening 12 more branches."
Banks combined mobilised $127.22 billion through FCNR (B) deposits in less than three months until the central bank-driven dollar mop-up exercise closed on August 31, the RBI said earlier this month. HSBC offered deposits ranging from $100,000 to $2.5 million, with a leverage up to 19 times, mostly financed through its branch in Gift City, Gujarat. Out of the $52.8 billion loaned through the Gift City international financial services centre, HSBC accounted for $10.9 billion.
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Globally, the Middle East was the top contributor to the bank's FCNR (B) scheme, followed by Singapore and Hong Kong. Deposits came from more than 30 markets, Batra said. "We were fully prepared from an NRI reach perspective, number of relationship managers, our focus on the global Indian with, of course, the size and scale of our brand," he said.
The fact that the bank has an ongoing six-year-old operation in Gift City gave it an advantage, he said.
"We already have clients in thousands in Gift (City). We will pay out interest every six months, which our clients can invest in a range of funds. Clients can make fresh deposits or use our multiple forex cards to spend money," Batra said. "We also have a 7.5%, three-year fixed mortgage, which is attractive in a rising rate scenario."
HSBC offered a flat 5.5% interest on three- to five-year deposits. The lending rate was 5% to 5.15%, or 35-50 basis points below the deposit rate. How much clients could borrow depended on their credit profile. After taking into account the leverage, the delivered yield for clients was 10-14%.
Batra said one-third of the clients onboarded during the 52-day RBI window were credit appraised, which would be a force multiplier for the bank's wealth management business across the board.
In wealth management, HSBC offers services to clients starting with ₹50 lakh of assets to up to $2 million (₹ 80 crore) for private banking clients. With a retail broking business now likely to be started later this year, the bank has a full suite of products to offer to its wealthy clients, Batra said.
The bank plans to use the liquidity generated through the FCNR scheme conservatively, he said. "We are finding deployment tools; those deployment tools should be corporate lending, which is match funded, and mortgages like the three-year fixed product, which we launched recently. Some of it could be deployed into government securities. So, it will be a combination."
