After taking charge as the country head and managing director of Barclays Corporate, India, Karan Bhagat changed the bank’s focus on retail banking from the mass market to the affluent segment. In an interview with Somasroy Chakraborty, he talks about the bank’s plans for India. Edited excerpts:
What key challenges have you faced since taking charge as managing director of Barclays Corporate, India?
We have now expanded our businesses across different areas —- investment banking, corporate banking, wealth management and retail banking. We believe there is a lot of strength in having these areas under our belt in India. One of the key challenges we face is exploiting this strength. We need to set ourselves in an efficient manner to appear seamless to clients. As far as achievements are concerned, we have been able to change the focus of our businesses in a number of areas in a short period of time. On the corporate side, we have aligned ourselves with the investment banking business, while on the retail side, we have been able to increase the share of our secured loan portfolio. In 2007, when we started our retail business, we had a more mass market approach. But now, we mostly target affluent customers.
What areas would Barclays Bank continue to focus on in India?
One of the big focus areas is corporate banking. It has been our focus in the past one year as well. We have spent quite a lot of time in honing our products for our corporate banking clients. We have hired some key personnel and are also taking a close look at the pricing of our products.
How do you plan to expand your secured loan book with a limited branch network?
There are, of course, a lot of well-established players in the secured retail loan market. However, it is a big and growing market. If an organisation provides competitive pricing, has distribution in the right places and can turn around applications in a timely manner, then the market is big enough to absorb it. We have nine branches – four in metros and five in under-banked areas. Branch strength has a big role to play on the liability side, but origination of assets is mostly done through agencies.
There are reports that Barclays Corporate may review its credit card business, which is part of your unsecured retail assets. Please confirm.
I cannot comment on market speculations.
The Reserve Bank of India (RBI) would come out with guidelines for foreign banks. The regulator prefers foreign lenders to set up subsidiaries. What are your views? If foreign banks are asked to set up subsidiaries in India, would you consider listing here?
We welcome the fact that the proposals have been put forward. We need some more clarity on certain aspects like tax treatments, branch licensing and stake dilution. When the guidelines are introduced, we would be in a better position to state our view. As far as listing is concerned, it is a little early for us to think on those lines. However, we would never rule it out completely.
Since inflation remains a key concern for RBI, do you think there would be more policy rate increases in the next year than previously anticipated?
Recent inflation numbers suggest the period of high inflation would last longer than people would have estimated two or three months ago. I think policy rates would be raised by 50-75 basis points over the next one year. There is a lag in the effect of monetary policy on inflation. That is one reason why we are still sticking to our forecast of a rise of 50-75 basis points in policy rates.
