Hongkong and Shanghai Banking Corporation (HSBC), the second-largest foreign bank in the country in terms of branch network, has resumed offering unsecured loan products after more than two years.
While the lender is offering personal loans only to clients with whom it has a prior banking relationship, it is acquiring new customers in the credit card space. The bank, however, is now more cautious than ever before in sourcing these businesses.
“This time we are doing things differently,” Gannesh Bharadhwaj, head of retail banking and wealth management at HSBC in India, told Business Standard. “The last time all of us went into the market, things blew up and we shut shop. Now, everybody is going back to the market again. If we do the same thing, why would we get a different result? Hence, this time around, we are being very careful about the customer we target.”
In the credit card business, where close to 90 per cent of the new sourcing is likely to be of customers who previously did not have a banking relationship with HSBC, it has planned to partner organisations that can share the database of their clients. The bank has partnered travel portal MakeMyTrip for a co-branded credit card. As part of this tie-up, the travel portal will share its clients’ database with the bank, that will allow the lender to assess the profiles and target customers. Through a ‘Corporate Employee Programme’, the bank is offering credit cards to employees of top companies in the country.
“We try and look for proxies where we feel we can find the customers we want. We are a bank for the mass affluent. We are not out there to compete with large Indian banks,” Bharadhwaj said.
The bank’s strategy to acquire new customers for credit cards will also allow the lender to cross-sell financial products, he added. HSBC’s credit card base in India is less than a million and the bank is now issuing close to 10,000 cards every month.
The bank had stopped secured and unsecured retail lending in India following the financial crisis of 2008-09. The move was aimed at improving profitability, which was stressed due to deteriorating asset quality. The losses in the retail banking and wealth management businesses narrowed to $14 million in 2011 from $83 million a year earlier.
Bharadhwaj said the bank had resumed mortgage lending in 2010 and was currently ramping up this business. The average ticket size of these loans was higher than the industry average and the mortgage product was aimed at the bank’s premium clients.
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