An Indian Banking Dilemma: To hire or to fade away

While Citi and HSBC continue to attrite operations trying utilise 2008 era Projects to mop up profits in flailing retail banking expansions thru staff cuts, the new subsidiarisation expectations of the Central Government have first extended the life of these true blue attirtion projects to a post 2012 world in India where having 20 branches would be an apparent show stopper, banks having decided not to assess further India ramp up projects till this battle front with the Central Government has been taken down.

RBI expects the foreign banks to adhere to 40% priority sector targets , operate as independent subsidiaries and  expand regionally with easier branch licence access but only a few like Deutsche Bank where Head office is able to bear the notional costs of moving Capital to Indian operations per se than netting out their banking exposure thru reliance on structured products.

In the Private Indian banks, hopes of a recovery and thus sure footed retail expansion is likely to have been unwittingly scuttled by these moves as well as the Economy continues in a vacillating mode and foreign investment not welcome. This is apart from wanton excuses on offer to practising bank managers as salesmen as they assess their performance and entertain requests for credit . India’s collection methodologies rely on various sales support mechanisms hitherto no longer in practice in the West because ofbetter security protocols and increases in Credit card spending as Debit cards cede share from 67% of payments to probably a longer term trend of even less than 60% and Credit Card spending reaches critical mass in many areas.

Festival season up ahead will further provide a bigger fillip to card usage. Card spends on Credit cards ended belo a INR 1 T for Fscal 2012 despite a heavy rush in holiday season. Rationalisation of outstanding credit card numbers continues but spending is likely to end Fiscal 2013 ith a further increase int he share of retail credit cards. Securitisation of receivables and Securites Lending businesses have not developed in the local market. The uptick in Corporat ebusiness for banks will likely favor foreign banks vis a vis Private Indian Banks again this year in non SME/MSME accounts where PSE banks have a hold. 

However that strategic front does not preclude feverish hiring and hiring managers expect to be busy given India’s bottom quaartile performance wwill still have a 6% component ith retail consumption increasing transaction business and corporate credit business growing back after a tough 2-3 quarters in 2009 for some and 2011 most others. 

 

 

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