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Business News/ Industry / FirstRand Bank to shut retail, SME lending operations in India
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FirstRand Bank to shut retail, SME lending operations in India

FirstRand Bank will, however, continue its operations in corporate lending and investment banking in India

FirstRand Bank India CEO Rohit Wahi. Photo: S. Kumar/Mint.Premium
FirstRand Bank India CEO Rohit Wahi. Photo: S. Kumar/Mint.

Mumbai: FirstRand Bank has decided to shut its retail and SME lending business in India, according to a top management executive. The South African bank will, however, continue its operations in corporate lending and investment banking in the country.

“Our decision is in line with our strategy to streamline our business in India and further strengthen our successful initiatives, namely, corporate and investment banking, Indo-Africa corridor trade and micro lending," said Rohit Wahi, chief executive officer and country head for FirstRand Bank India.

“Whilst the group believes that its retail and SME business lines should be in a position to compete in India in the longer term, the short- to medium-term opportunities to properly scale these businesses are limited. This is particularly so given the current competitive and regulatory dynamics in these segments," the bank said in response to a Mint query.

In April 2012, FirstRand Bank launched its retail and commercial banking operations in India and Gary Kirsten, former South African cricketer, was appointed as the brand ambassador in India. The bank’s India operations, with a focus on corporate and investment banking, were started back in 2009.

About 86% of the bank’s revenue comes from South Africa. 10% comes from the rest of Africa and other markets including the UK. India contributes 4%.

After facing losses in the six years of operations, FirstRand Bank decided last year to focus more on SME lending and individual loans in India. It hired Ramaswamy Gopalakrishnan, former head of SME banking at Citibank, in May last year to boost SME lending.

According to a Mint report in August 2015, FirstRand reported a net loss of Rs64 crore in 2014-15, down from a loss of Rs77 crore the previous year, as interest income increased to Rs106 crore from Rs86 crore. The bank also set aside a lower Rs8 crore in provisions for the year ended March 2015 compared with Rs13 crore in the previous year. After writing off two of the three non-performing asset (NPA) accounts reported last year, the bank’s gross NPAs reduced to 7.82% of the total loan book, down from 15% in March 2014.

Several multinational banks in India are in the process of reducing presence by shutting various divisions as well as branches.

In May, Royal Bank of Scotland Plc. decided to wind up its corporate, retail and institutional operations in India and shut its 10 retail branches, as part of a plan to reduce its global footprint.

The UK-based Barclays Plc. is shutting down its cash equities division in India, in line with a decision to exit this business across the Asian region, Mint reported in January. Bloomberg had also reported in January that Barclays will cut 1,000 jobs worldwide and exit several Asian countries.

In 2015, Standard Chartered Plc. shut its equities business, including cash equities, equity research and equity capital operations, in India.

In May, another UK-based bank HSBC Holdings Plc. also decided to halve the number of branches in India to 26 from the current 50 and turn its focus to retail banking through digital channels.

Citigroup Inc., the largest foreign lender in India by assets, plans to shut about 10% of its branches in the country as more customers switch to its digital platforms to conduct their banking transactions, Bloomberg reported last month.

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Published: 21 Oct 2016, 01:48 AM IST
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