Unique mode of Financial Inclusion from HSBC

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New Delhi, Aug 10: The Hongkong&Shanghai Banking Corporation Ltd (India) has adopted a unique model of financial inclusion where its employees volunteer to work for projects which are being run by the Self Help Groups (SHGs) funded by the Bank.

''It is mostly the younger employees which are coming forward to offer their services, for which the Bank offers no incentives. We are only facilitators,'' says Ms Naina Lal Kidwai, HSBC Country-Head India. Ms Kidwai said the Bank as part of its financial inclusion strategy is funding SHGs and Micro Finance Institutions (MFIs). The employees go and work in institutions that are being run by these SHGs. These are mostly schools, dispensaries and development projects.

In chat with newspersons, Ms Kidwai said the enthusiasm of the employees deserves commendation as what they do in these projects does not find a mention in their confidential reports. They also often pay for their travel to go to these projects. The employees of the UK-based Bank are normally better paid than those of Indian banks. It is perhaps this feeling which spurs them to community action.

Those who have had their fill would want to return it back to society. ''It is love for India and the good sense of community service which drives the youth of the Bank to work for the less privileged,'' Ms Kidwai said. ''The younger generation is a wonderful lot,'' she remarked. Ms Kidwai said a key challenge before the Banking sector is to bank the hitherto unbanked population and reach the bottom of the pyramid. According to a recent survey only 59 per cent of the adult population in India has a savings account. In rural areas only 39 per cent of the adult population enjoys banking facilities. On a question relating to the thrust areas of the Bank, Ms Kidwai said the focus on Corporate lending will remain funding to Small and Medium Enterprises (SMEs) and help them graduate to higher levels.

She said in Tier-II and Tier-III cities, there is mushroom growth of the SME sector. The Bank with substantial experience--domestic and foreign--can help the growth of these firms. It is not just the requirements of capital that is needed but also environmetal knowledge--both business and ecological-- that will help these companies prepare for the ever tougher competitive environment in which they will have to work. To a question pertaining to outlook for profits, Ms Kidwai said HSBC India expects its profit growth to moderate in the 2008-09 financial year due to the prevailing high-interest rate environment leading to a credit slowdown in the country. HSBC India had posted a net profit growth of 41 per cent in 2007-08 and 64 per cent in 2006-07.

It posted a 24 per cent growth in Profit Before Tax (PBT) in the first half of 2008.HSBC India's balance sheet stood at Rs 76,000 crore in 2007-08, 40 per cent of which is in retail. ''We intend to maintain retail portfolio at that level,'' Ms Kidwai said. While the Bank is rapidly expanding wholesale banking, corporate banking and trade financing, it is consciously moderating exposure in the retail sector owing to higher provisioning.Ms Kidwai said if interest rates remain on a higher level for the next six months, demand for credit from corporations would be impacted. She was of the view that the interest rate scenario will remain ''flat'' at least for the next two to three months. Ms Kidwai said there had been a slowdown in credit offtake from big corporates and Small and Medium Enterprises. However, there has been a natural slowdown in retail segment.

''If interest rates continue to stay high for the next six months, there will be a slowdown in investment spend. From being buoyantly optimistic about business environment, India Inc is now cautiously optimistic. They are adopting a wait and watch approach,'' Ms Kidwai said. She said the global footprints of the Bank are an advantage. It enables transfer of technology and helps access the complete profile of a customer. It is on this basis that the credit profile of the client is assessed. However, credit cards have been issued on a stand alone basis. This has sometimes created problems of its own for the Banking sector, Ms Kidwai said. HSBC Bank was founded in 1865 to serve the needs of the merchants of the China coast and finance the growing trade among China, Europe and the United States. The origins of HSBC Bank in India can be traced back to October 1853 when the Mercantile Bank of India, London and China was founded in Bombay.

In 1959, the Mercantile Bank of India was acquired by the HSBC and the head office of the Bank was established in Mumbai. In 1987, the Bank gave India its first ATM. Through the 1990s, HSBC Bank blossomed into one of the leading banking and financial services organisations of the world. HSBC Bank has about 10,000 offices in 76 countries and territories in Europe, the Asia Pacific region, the US, West Asia and Africa. The tagline of HSBC is 'The World's local Bank.' The manner in which the Bank, more particularly its employees, have got on to serve local communities in India and and the Bank increasingly lending to Small and Medium Industries, is a testimony of how a foreign bank is adapting itself to local conditions.


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