'When the market is good, you have to capitalise on it'

'Within India, people want high-quality, personalised banking services, and the demand for such services has exploded.'

At a time when foreign banks in India are recalibrating their operations and selling off portfolios to domestic players to focus on niche areas, HSBC India is looking to strengthen its presence across various segments, including wealth management, corporate banking, startups, and its equity and debt capital markets businesses.

Hitendra Dave, chief executive officer (CEO) of HSBC India, spoke with Manojit Saha and Subrata Panda/Business Standard in Mumbai about the London-based bank's plans for India and how it aims to capitalise on the opportunities the country has to offer.

There have been outflows from both equity and debt markets after the US election results. When do you think this trend will reverse?

The quarterly results of most companies have been underwhelming. Not only have the results been subdued, but the forward-looking commentary has also been subdued.

So, it's difficult to say that Donald Trump's win in the election caused the outflows.

I'm sure it triggered some thinking because if there's talk of tax cuts in the US, that would make those markets more attractive.

So, there is an obvious pull factor from the US, but there's also a push factor from India in the form of subdued results.

When it comes to government securities, almost everyone has dialled back expectations of any Reserve Bank of India (RBI) action, purely because the inflation print has been higher.

Either inflation needs to start receding and falling at a much faster pace, or corporate earnings need to start reflecting the growth potential embedded in a high-growth economy.

Alternatively, expectations of an RBI rate cut could be brought forward.

That is when you would expect people to come back in a big way.

Is the RBI's projection of 7.2 per cent gross domestic product growth too optimistic?

On growth, the reality is, depending on which camp you belong to, you can latch on to data and argue that it will be above 7.2 per cent or around 6.5 per cent.

If you look at the number of e-way bills in October, it was the highest ever.

I assume that goods and services tax collections and the number of e-way bills are the broadest indicators of economic activity.

Similarly, the last trade data showed a 17 per cent increase in exports.

The trade deficit was wide, but exports were up by 17 per cent, and imports were up by 2-3 per cent.

So, India is currently producing data that supports both arguments.

If you want to argue that growth is slowing down, you have plenty of data points. If you want to argue that growth is not a problem, there's data for that as well.

I think we just need more data to comprehensively conclude whether this year will be a 7-plus or 7-minus year.

Do you think a rate cut would help create demand in the economy?

Given the inflation prints we're seeing, it's very difficult for a central bank to cut rates.

The worst thing would be to cut rates, only to later say that a mistake was made.

If they were to cut rates two months later, it wouldn't make a difference.

But once they cut, it has to be decisive, meaning the RBI would need to say, "We will now be low for long".

What are your bank's plans for India, given that major foreign banks are lowering their presence?

No one can deny the amount of wealth that India has generated in the past five years.

I'm sure more millionaires have been created in the past five years than in the previous 40-50 years.

Within India, people want high-quality, personalised banking services, and the demand for such services has exploded.

However, the number of banks providing these services has decreased.

So, the opportunities are growing, and the competition is shrinking.

We are focusing heavily on wealth management, leveraging our global presence, and offering product propositions that allow people to engage with the world from India.

For instance, if you have a child studying abroad, you can pay fees to 600 universities through our application.

I've financed 13 out of the 17-18 live offshore acquisitions made by India Inc.

I am also banking nearly 2,000 startup companies, and I'm banking 50 per cent of India's unicorns.

I have a $600 million lending fund for startups.

I bank about 50 per cent of the multinationals in the country. Wherever I look, I see growth and opportunity.

How many foreign banks can have a significant business in India?

At this juncture, if a bank wants to compete on scale, size, capabilities, and product range like a local private bank while retaining its international character in terms of governance, risk management, and technology, I think the market has room for only one bank to think like that.

We hope to be that very big international bank. We are hoping to match, in the next five to six years, what we have built in the previous 165 years.

So, you will need capital from the parent?

My assessment is that we are generating sufficient organic capital through profits.

However, if we need capital, India is the absolute top priority for the group right now.

Given this situation, if we were to ask for capital to support our growth needs, I have no doubt the group would support us more than objectively.

HSBC India contributes 3.7 per cent of the group's profit before tax, which was $21.6 billion during the January-June period of 2024.

Will you go to Tier-II and Tier-III cities in search of opportunities in wealth management?

Wealth management is a business we are looking to grow substantially. It's perhaps one of our highest focus areas.

Since it's such a key focus, we have to go where the customers are.

Once we're properly organised, we will focus on areas where wealth is being created.

What are your plans for the debt and equity capital markets business?

The debt capital market (DCM) has historically been a strong area for us.

The number of debut issuers using our services is higher than any other bank's, and we have the most repeat mandates from regular issuers.

In the equity capital market (ECM), we've made a lot of progress as well. We're ramping up the entire investment banking business.

In qualified institutional placements, we're possibly the market leader.

While everyone thinks HSBC is a very strong DCM bank, we're just as strong in ECM.

How do you see the pipeline of dollar bond issuances?

Given the spreads we're seeing, I'm calling up every CEO and telling them not to waste this opportunity.

When the market is good, you have to capitalise on it. This is an opportune time to raise dollar bonds.