HSBC is planning to go slow on consumer asset finance and credit cards as delinquency levels are on the rise.
The bank will also reduce the flow of loans under HSBC Pragati Finance, a product aimed at the low and middle income groups, said Naina Lal Kidwai, the HSBC country head for India on Thursday.
Most private and foreign banks are going slow on unsecured loans and fresh credit cards as delinquency levels have risen due to higher interest rates and economic slowdown. At the end of May, credit card outstanding rose around 87 per cent.
While maintaining that Indian companies were under-leveraged, the HSBC India chief said defaults on the corporate loan portfolio were virtually non-existent.
Though some banks have started going slow on lending to small and medium enterprises, Kidwai is still betting big on this segment. She estimated that bad debt has increased by around 30 per cent. Commenting on the credit quality of banks, Kidwai said, “It is certainly a tough time. There is an emphasis on results as well as the retail portfolio. Banks are vigilant on the retail front and their provisions are up.”
“In the retail segment, there are concerns on consumer asset portfolio and credit cards. Credit cards were sold more than they should have been. In some cases, a person holds up to five or six credit cards,” she said, while calling for sharing of the list of blacklisted card holders and outstanding dues.
“There is a fundamental weakness in the credit card business, which is lack of credit rating. There should be an information-sharing mechanism. Sharing the amount of outstanding bills would be the ideal way,” Kidwai said. HSBC has issued 2.7 million credit cards so far.
While stressing on organic growth, Kidwai did not rule out the possibility of inorganic growth. “Organic growth is high on our priority. We will not ignore inorganic growth. We will look for an acquisition if the price is right and the deal suits us,” she said.
