Barclays, which notched up losses in its unsecured loan portfolio in India during the downturn, and was forced to shrink the balance sheet, now plans to step up the pace. Karan Bhagat, who took over as MD & Country Head in mid-May talks to FE?s Mahalakshmi Hariharan and Sitanshu Swain about the company?s focus areas and its plan to grow the retail secured loan portfolio

What does the asset book look like?

Looking back, 2007 was probably not the best time to have launched our retail banking services, just a year before the financial crisis. We had shrink our balance sheet and since September 2008 we have reduced the pace of origination both in the retail and corporate segments. The quality of assets created for both the non-banking finance company (NBFC) and the bank, over the last year-and-half, appears to be good and impairments are well within limits. We will like to grow the business but getting the balance right is very important. We would like to limit impairments within reasonable levels while growing our assets.

What are going to be your focus areas?

Our retail, corporate, wealth management and investment banking businesses are very much in the growth mode. On the retail front we do face constraints due to size of the distribution network. We?re also looking to grow the syndicated loans, treasury, M&A advisory and risk management businesses and some parts of the business, those that I am responsible for, may see slower growth.

Going forward, will the focus be more on secured lending?

Three year ago when we started the retail business, we did have a very high proportion of unsecured lending. Now we want to do more secured lending. We are growing our mortgage book and have introduced ?under construction home loans? and lease rental discounting, in addition to the vanilla products. We also expect that unsecured loans will remain a substantial part of our retail portfolio, including credit cards and personal loans, though the share of secured loans will go up. So we are not pulling out of the unsecured space since we feel pulling out completely would be a wrong decision. Currently, our mortgage book is small but growing. We would like to see our retail portfolio trend towards a 50:50 ratio, of secured and unsecured loans in five years time.

Would you focus more on growing the top line or bottom line?

We will focus more on growing the bottom line and to do this we have to grow the top line. Impairments are on a very good trend so the focus now is to grow our top line. But we want to grow it in a controlled manner.

What are your plans on the retail front?

On the retail side we will focus more on the mass affluent segment and customers earning Rs 6 lakh and more in 13 cities where we have a presence through the NBFC. We have applied for nine branches to the RBI and will be glad if we get more branches. As I said, we are very much in the retail business out here and have decided to look at the medium term in India. So we?re going to be in retail and corporate businesses. The split between the retail and corporate book is roughly 50:50.

How are you coping with the constraints of a low distribution network?

There is a lot of upside in India and given the constraints of distribution we are taking the NBFC route, investing in ATMs and online banking. It?s going to be a challenge, but I am optimistic. We will continue to have a presence though NBFCs. We want to hire more people in the retail segment.

How do you plan to compete with other foreign banks?

Our focus is going to be on Indian clients wanting to trade with Africa, UK, Europe and the US, since we have operations in these places. We can also provide transactional banking services and trade services and can work with Indian companies that want to expand overseas.