Mumbai, March 30, 2005
IndusInd Bank, a new generation private sector bank
in India, has decided to set up a capital market subsidiary
with an initial corpus of $10 million to provide a
bouquet of investments services.
The bank has also decided to sharpen its focus on
the vast and prosperous non-resident Indians (NRIs)
market by floating new financial services with a view
to boosting incomes in the years ahead.
"The capital market subsidiary will be set up
as a joint venture with an overseas private bank.
We have identified a few banks and are in advanced
stages of talks with them," said Bhaskar Ghosh,
managing director of IndusInd Bank Ltd.
"We are looking at setting up the arm with an
initial corpus of $10 million. It will offer a wide
range of services like portfolio management, wealth
management, investments in mutual funds," Ghosh
told IANS in an interview here.
"The services will be especially customised
to suit the needs of high net-worth overseas Indians
as they are increasingly looking at turning their
remittances into profitable investments in India."
Ghosh said the equity holding pattern of the capital
market subsidiary between IndusInd Bank and an international
banking player would be decided after obtaining the
approval from the Reserve Bank of India (RBI).
"How much we will hold in the joint venture
will depend on regulatory issues. We would like it
to be a 50:50 joint venture but if the regulatory
framework doesn't allow us to do so then we may have
to change the equation," he said.
"In that case, we will hold 30 percent, 20 percent
will be owned by the persons acting in concert and
the remaining 50 percent will go to the international
banking partner. We are in dialogue with the RBI."
As per present regulations, a commercial bank cannot
pick up more than 30 percent equity stake in a company
engaged in activities that are not considered to be
part of the core banking operation.
According to Ghosh, the capital market subsidiary
is likely to start operations in the country by end
of the current calendar year after getting the approval
from the regulators concerned.
Experts say with the Indian stock market emerging
as one of the major players in Asia with increased
inflows of foreign investments, there is a huge appetite
among overseas Indians for local capital market related
financial products.
With a view to enhancing the share of NRI deposits
with IndusInd Bank from 10 percent now to 15 percent
next year, Ghosh said the bank would unveil a slew
of other measures to attract overseas Indians' investments.
"We are going to open up new branches in NRI
rich states like Kerala, Gujarat and Punjab. We already
have two overseas offices in Dubai and London to serve
the needs of NRI customers," he said.
"We are looking at opening more overseas branches
in regions that have good concentration of NRIs,"
said Ghosh, adding that his bank has unveiled two
new online money transfer products for Indians abroad.
Remittances, or money sent home by emigrant Indians,
are pushing India to the top slot among all developing
countries -- accounting for about five times the country's
foreign direct investments per year.
India was the world's leading recipient of remittances
in the fiscal year 2003-04, accounting for about 20
percent of global flows. This is estimated to have
continued in the current fiscal year.
Experts say such money transfers not only shore up
the nation's foreign exchange reserves but also have
a positive influence on the global economy.
An estimated 25 million Indians live abroad, with
strong concentrations in North America, Europe, Africa,
the Gulf, Southeast Asia and Australasia
