HSBC plans to set up NBFC

HSBC has decided to set up a holding company in India called HSBC NBFC for its non-banking financial activities.

The bank will bring its broking arm, mutual fund, and an operating non-banking financial services company (NBFC) under the holding company.

The plan includes injection of $30 million into the proposed HSBC NBFC by HSBC Investment Bank Holding BV.

The other step is for HSBC Investment Bank to sell its holding in HSBC Securities and Capital Markets Pvt Ltd (HSCM) to the proposed HSBC NBFC at par value of $20.55 million.

HSBC (Hongkong and Shanghai Banking Corporation) also intends to increase its shareholding in HSCM and HSBC Asset Management (India) Pvt Ltd to 100 per cent from 75 per cent.

HSCM has sought approval of Foreign Investment Promotion Board (FIPB) for its plans to reorganise its non-banking financial services businesses.

HSBC spokesperson declined to comment on the development citing "silent period" ahead of announcement of the bank's financial results.

The application said HSBC NBFC will set up wholly-owned NBFC operating company and other subsidiaries in financial services segment as required from time to time.

HSBC wants to set up an NBFC to overcome the issue of reach for consumer financial services as RBI's branch licencing policy acts as a limiting factor.

As an NBFC, the proposed HSBC arm will enjoy the freedom to decide on expansion. HSBC currently operates through 42 branches in the country.

HSCM has informed FIPB that the total capital invested by the HSBC group in the financial services segment will be $50.55 million ($20.55 million in HSCM and $30 million in HSBC NBFC).