Standard Chartered Bank to walk the hinterlands

Standard Chartered Bank plans to focus on tier-II and -III cities and expects contribution from such towns to its total business volume to surge to 40 per cent from over 20 per cent now.

To this effect, the bank will expand its branch network in tier-II and -III towns this year, said chief executive officer, India region, Neeraj Swaroop.

"The penetration of retail banking services in smaller cities is low and there's big opportunity out there," Swaroop said.

He was talking to reporters after the launch function of a co-branded credit card with Bajaj Allianz Life Insurance. The card will enable policyholders to pay premiums through equated monthly installments.

The UK-based bank has already secured approval from the Foreign Investment Promotion Board (FIPB) for setting up an asset reconstruction company.

"We are in talks with four public sector banks to work out the shareholding pattern of the company, in which we will hold 49 per cent. By June 2006, we would approach the Reserve Bank of India for a licence," Swaroop said.

He ruled out any possibility of a reduction in demand for retail loans due to increase in interest rates. However, he expects the rates to either stabilise or rise slightly.

In smaller towns, Standard Chartered plans to focus on small and medium enterprises, wealth management, insurance and innovative deposit products.

Murali Natrajan, head - consumer bank, India and Nepal, Standard Chartered Bank, said, "Banks are yet to tap the existing retail opportunities in India. As many as 59 million Indians have annual income exceeding $1,800. This figure is expected to double by 2010-11."

In 2005, Standard Chartered forayed into project financing and corporate real estate financing. Through these ventures, the bank is now looking at infrastructure lending opportunities in aviation, shipping and real estate.

The bank had Rs 22,000 crore worth customer assets in 2005, of which real estate ventures accounted for a small percentage.

The co-branded credit card with Bajaj Allianz will allow policyholders to avail of benefits at 140 diagnostic and medical centres.

The card offers zero per cent interest rate for a three-month EMI and 0.99 per cent interest per month for a 12-month EMI. In case of payment of medical and hospital expenses in excess of Rs 10,000, cardholders can have similar payment options.

The agency force of Bajaj Allianz will also sell the co-branded credit card to policyholders. Initially, only 10 per cent of the agents will be allowed to sell the card, said Sam Ghosh, CEO, Bajaj Allianz.