A review of India’s bank ownership
rules could provide an easier route to market for international
private banks and wealth managers.
The Reserve Bank of India (RBI)
rule changes include offering a limited number of licences to new
banks and could lead to the re-entry of large Indian industrial
companies. Another proposal suggests capping non-resident
investment in banks to 50% and locking it at that level for the
first 10 years.
Go deeper with GlobalData
India, with the second-highest
ultra high net worth population in Asia and a burgeoning middle
class, is one of the world’s most exciting wealth management
markets. Yet practical concerns mean it remains one of the hardest
to break into for foreign firms.
Problems with greenfield
operations
Setting up greenfield operations
are particularly problematic because of the difficulty of
differentiating in a market which still has a fairly limited
product range available to onshore clients.
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By GlobalDataSpeaking as part of a PBI
roundtable in Mumbai in September last year, ING Vysya head of
private banking Samir Bimal said most foreign private banks that
had gone in solo in India in the past 12 months had found it very
challenging.
“You see the model, the strong
international names coming into India and setting up private
banking,” Bimal said.
“If it is largely a
distribution-led market. Apart from hiring private bankers, you
can’t do anything.”
RBI grants Credit Suisse
banking licence
The RBI proposals came just before
Credit Suisse received a licence from India’s central bank to
establish a bank branch in Mumbai.
The licence enables Credit Suisse
to substantially expand the range of services it offers in the
Indian market, including dealing in Indian Government securities,
other domestic fixed income products and foreign exchange.
The most active players in Indian
wealth management have been BNP Paribas/Geojit and Religare
Macquarie.
Last month, Japan’s Sumitomo Mitsui Banking Corporation
completed a deal to acquire 16.4m shares in Indian bank Kotak
Mahindra. Kotak’s wealth management arm claims to provide financial
advice and manages the wealth of 30% of India’s top 300 families
and serves 3000 private clients.
