The consolidation process through equity participation among banks in India has gained momentum with UK-headquartered Standard Chartered Bank picking up stake in some banks in the country.
Confirming the move, Neeraj Swaroop, regional chief executive, India and South Asia, Standard Chartered Bank, said, ?Like any foreign player interested in India, we have already invested up to 5% stake in a few banks in India.?
Swaroop, however, did not divulge details but said that the bank is seeking many more such opportunities.
“We will be interested to have a substantial stake in any potential bank when the Reserve Bank of India relaxes investment norms in 2009.?
Recently, YES Bank acknowledged that the bank was receiving investment proposals from various foreign banks through the equity-sale route. Rana Kapoor, founder managing director and CEO of the bank, told FE that it received proposals from three foreign banks for a 5% stake sale. But he said his bank was not keen on any divestment as of now but would look at it post 2009, when the regulators relax existing norms.
One of the prime reasons for foreign banks seeking a 5% stake in other banks is to benefit from their presence in Tier-I and Tier-II cities. These city-centric banks would look at improving incomes through such stake sale with other large networked banks.
?To encash the SME sector boom, especially in the feeder cities, a substantial strategic equity participation in future by Standard Chartered Bank cannot be ruled out completely,? said Swaroop.
He added, ?In future, we want to play an active role in the merger and acquisition activities of the Indian SME sector. Since there is an increasing interest among Indian companies in Asian countries over the US and Europe, we will be able to service deals more effectively due to our presence in Southeast Asia and China.?
An eminent banker said, ?Standard Chartered Bank has decades old presence in India but hasn’t penetrated fully into Tier-II or Tier-III cities. Now, they are regretting their absence in some of the most developing areas of the country.?