The biggest lesson from the recent crisis is that managing the balance sheet and liquidity is critical. Our own monitoring has become more detailed and sharper now. RBI is also far more sensitive today, as it should be. India?s banking regulator, in fact, was always very sensitive. Banks have drawn new lessons from the recent crisis on credit risk management and pricing of loans.
Fortunately, the Indian banking system has not been very badly affected by non-performing loans. Some banks were hit, but not as much as was feared or anticipated. Compared to economies worldwide in the last five years, India grew at a relatively faster rate. Thus, the demand for banking services are, and will remain, very strong in India. For the Indian economy, the worst is over?although there could be a few surprises. So, we cannot be complacent.
Stanchart?s operations in India are back to normal and we are currently expanding our corporate as well as consumer balance sheet. SMEs and mortgages form a significant share in our consumer segment in the country. My bank escaped unscathed from the crisis, as consumer lending was not our focus. About three years ago, we started to slow down the credit card business and four years ago, we slowed down our auto loan activities and then exited. We do not do auto loans now and only selectively promote our credit cards.
We slowed down our personal loans in early 2008. Yet, we were hit a little in this segment. About four years ago, we set up a high-risk SME loan business, which is doing well. It?s a large market, as almost 30-35% of the whole Indian banking system?s revenues come from the SME segment. Currently, almost 25% of our assets are in the SME segment. The credit quality of this portfolio is very good.
Going forward, due to our bank?s size constraints, we will not offer retail services in an aggressive manner, unlike wholesale services. Around 70% of our revenues come from the wholesale business and rest from retail.
By and large through the crisis, Indian policymakers and regulators have been very responsive. They have handled the crisis very well. Going forward, the agenda for India remains unchanged: there needs to be a continuing commitment to the reforms process in the financial sector. I see such a commitment from the concerned authorities.
Investments in soft as well the hard infrastructure should be executed at a faster pace.
Indian corporates are efficient and gradually they have become, in aspiration, global in their business models. That should continue in future, too. The globalisation of Indian corporates is, thus, helping the Indian financial sector to grow faster.