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BNP Paribas, which operates in 71 countries, is one of the leading foreign banks in India, with a long history of offering a host of services. As the world emerges from the worst of covid-19, the bank is gearing itself to meet the challenges and opportunities in India and elsewhere. In an interview, Aymar De Liedekerke Beaufort, chief executive officer (CEO), BNP Paribas India and Sanjay Singh, deputy CEO, BNP Paribas India discuss the key focus areas for the bank.

Given the obvious risks around us, what will be BNP Paribas’s core strategy in India?

Beaufort: There are risks in every market and every business model. What is important for us as a bank is our ability to be at the service of both our clients as well as the world that we live in. We are committed to financing economic development that has a positive impact on our clients and the society. And if this means, for instance, ceasing financing and investing activities to tobacco companies and shale gas, we have done so, across the world. From a client standpoint, it is very important for banks like us to understand and help them navigate business cycles with the right mix of advisory and financing. At BNP Paribas, we are backed by our strong army of in-house engineers and experts who have a strong understanding of complex sectors and can look through the numbers. It helps that being risk-conscious is in our DNA, and this means we help our clients identify the good risks for their business growth, and be their financial adviser in the true sense.

Underwriting risks in banking has been perhaps never as important as it is now. How are you managing yours?

Beaufort: Globally, every asset class is flush with liquidity and we strongly believe that good corporates with good stories will find liquidity in the current market. India, for instance, has witnessed a lot of liquidity, and underwriting for good risks has not been a challenge. It is fair to say that underwriting is difficult in case of bad risks but our clients are anyhow very selective in challenging market conditions. They are not willing to take a view on bad risk because there is not much clarity on how to revamp the business and take it to the next level. This kind of vigilance and prudence by banks as well as clients is a good practice for the economy as a whole.

While there are some green shoots, the overall picture on the global economic recovery is yet to become fully visible. How are you assessing the situation in India?

Singh: The key difference between the shape and pace of economic recoveries in India and the global set-up arises from the (covid-19) caseloads. While the global recovery has stuttered a bit due to a relapse of lockdowns, China and now India have had smoother and sustained recoveries due to the fact that both did not have to enforce stricter restrictions on businesses after exiting the harsh lockdowns at the start. Also, rural India has remained relatively insulated from the virus impacts, which has ensured that a large part of the demand chain remained unaffected. The industry was already stalling before the onset of covid and probably needed a kick-start in some form, which the pandemic has actually provided.

Do India’s current fundamentals justify it as a viable investment destination among emerging economies?

Singh: India’s current fundamentals, especially from a covid perspective, make it one of the most viable investment destinations among emerging markets. With a stable INR (India’s dollar reserves are at record levels at $580 billion-plus), political stability, low interest rates globally, a weaker dollar and change in China’s position as a favoured global trade partner, bode well for India from a long-term perspective. This has already been seen with 2020 seeing record FII (foreign institutional investment) and FDI (foreign direct investment) flows. We think the key for our policymakers to ensure that India remains the investment destination of choice will be to create predictable, consistent and business-friendly policies—right from the ease of doing business to the tax regime.

Secondly, a significant improvement in infrastructure and lastly, something that we have already seen in small parts, is the simplification of labour laws and incentives for foreign companies willing to commit to India for the long term.

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