'India a strategic priority for global banks': Foreign bank heads at BFSI

Heads of India's leading foreign banks discuss the key to success on Indian turf in conversation with consulting editor Tamal Bandyopadhyay at the Business Standard BFSI Insight Summit

At the Business Standard BFSI Insight Summit, held on Wednesday, heads of India’s leading foreign banks unanimously spotlighted the country as “probably the biggest opportunity in the world.” In a conversation with Business Standard Consulting Editor Tamal Bandyopadhyay, industry leaders shared insights into India’s growing prominence in the global banking landscape and the strategies that will shape their success in the region.  

 

HSBC and India’s technology advantage

 

Chief executive of HSBC India, H Dave highlighted the vast opportunities India offers. “The beauty of India is that there is room for everyone,” he said. Dave emphasised technology as the cornerstone of success, calling it an area where international banks hold a distinct advantage. “Our second distinct advantage is our people,” he said.  

   

Dave outlined HSBC’s focus on building dominance in corporate, trade, and affluent banking in India. “We don’t bring any unique advantage in the traditional sense,” he noted, comparing HSBC to domestic banks. However, the bank’s expertise in mid-market internationalism serves as its “superpower”. On marketing investments, Dave confirmed increased spending to strengthen HSBC’s position in India.  

 

Citibank’s strategic growth engine  

 

Sharing similar optimism, Ashu Khullar, CEO of Citibank India, called India a market of immense potential. Explaining the bank’s decision to exit the consumer banking space in India, Khullar said, “It was a global decision on where we, as a company, choose to invest.” While consumer banking contributed less than one-tenth of Citibank’s profitability in India, corporate banking continues to be a dominant growth driver.  

 

“We add value by bringing in capital and helping Indian companies expand internationally,” Khullar said, positioning Citibank as a key enabler of cross-border growth. Looking ahead, Khullar predicted double-digit compounded annual growth in India.  

 

Bank of America eyes sustainable financing  

 

Kaku Nakhate, president and India country head at Bank of America, painted an optimistic picture of India’s trajectory, stating, “India is on track to become the world’s third-largest economy, and the need for capital and financing will only grow.” She cited India’s ability to absorb larger capital investments and monetise value, highlighting recent milestones like Hyundai’s listing in India and private equity successes.  

 

Bank of America plans to expand its role in distressed debt markets and sustainable financing, Nakhate shared. However, she flagged India’s regulatory requirement for foreign banks to maintain substantial capital buffers at the branch level. “Profitability is essential, and achieving this relies on efficiency and innovation,” she said, expressing hope for more flexibility in regulatory policies to support India’s goal of becoming a $5 trillion economy.  

 

Barclays focuses on investment banking  

 

Pramod Kumar, CEO and head of investment at Barclays Bank PLC India, explained why retail banking remains challenging for foreign banks in India. “Retail is a very local proposition. There’s nothing global that differentiates it in this market,” he said, citing strong domestic competitors offering advanced technology and superior customer service.  

 

Barclays exited the retail banking space in 2011, acknowledging that the timing and strategy weren’t ideal. “We ultimately decided to step back from retail when liquidity was cheap, and many banks were pursuing aggressive moves without a unique value proposition,” Kumar said. Moving forward, Barclays sees India as a key growth opportunity, with plans to strengthen its investment banking operations.  

 

India-specific strategies are key  

 

During the discussion, a recurring theme emerged: the importance of tailoring strategies to India’s unique market dynamics. “Every customer we engage with globally wants to have a dedicated India strategy,” Khullar said, pointing to Citibank’s focus on commercial banking and niche sectors where it can add value.  

 

Khullar also praised the Reserve Bank of India for its regulatory reforms, which have improved corporate hedging options and derivatives flexibility. “This gives global banks like us an opportunity to leverage our expertise for the benefit of our customers,” he said.  

 

Navigating challenges and opportunities  

 

While foreign banks expressed confidence in India’s growth potential, they also emphasised the challenges of navigating regulatory frameworks. Bank of America’s Nakhate acknowledged the RBI’s efforts but questioned whether mandating foreign banks to establish local subsidiaries aligns with India’s growth ambitions. “If we were to localise, the ratings and counterparty risks would shift, as the capital would then be localised,” she said.  

 

Despite the challenges, the consensus among the leaders was clear: India’s economic ascent presents an unparalleled opportunity for global banks to expand their footprint and drive innovation. As Nakhate aptly put it, “If India is to reach a $5 trillion economy, all avenues of financing must be explored.”