HSBC bets big on factoring solution for SMEs

The HongKong and Shanghai Banking Corporation (HSBC) in India expects to add a significant number of small and medium enterprise (SME) customers in India through its 'factoring solutions', according to Margaret Leung, general manager, global co-head commercial banking, HSBC, Hong Kong.

The bank in India offers three financing products, including the factoring solutions, to SME customers. It currently has about 40,000 SME customers in India and is adding about 450 customers a month in the SME segment.

Addressing a press conference, Leung said factoring was a big business both in UK and Hong Kong and HSBC was hoping to add more customers in India as well.

According to a company statement, factoring is a structured working capital finance solution that includes finance against receivables of the company, collection of receivables on due date, credit protection against bad debts and credit advisory services. It also allows to convert accounts receivables to cash.

She said that commercial banking business in the Asia Pacific region reported higher growth than other regions and China and India were the fastest growing markets. HSBC expects to grow higher than the GDP growth in China and India.

The bank was also focusing on adding resources in India to cater to the SME segment. It had increased the number of relationship managers in SME business to about 230 now from a single digit in 2004. This year too, it is planning to add another 100 people.

During the first half of this calendar year, commercial banking business of HSBC globally grew 21 per cent to $2.9 billion while in Asia Pacific, it grew 36 per cent to $ 1.1 billion, of which over 50 per cent was contributed by the SME segment.