Page 6 - Banking Finance July 2020

BANK UPDATE

so that large projects can be supported Gandhi said at present, the RBI caps tory approvals, will complement our
and also pitched for a renewed thrust the promoter holding at 15 per cent, domestic business in India and flows
to be given to the wholesale banks allows other individuals to go up to 10 with our global financial centres," said
model. per cent and in the case of distressed Surendra Rosha, Group General Man-
Gandhi, who used to take care of the banks, can allow higher stake buys. To ager and CEO HSBC India.
critical banking regulation and super- a question on issues like the one at Tapan Ray, MD and Group CEO, GIFT
vision functions at the Reserve Bank, PMC Co-operative Bank and Yes Bank, City said the Indian government has
said in the last four years since the Gandhi said corporate governance envisaged GIFT IFSC as a hub to bring
central bank made licensing for univer- needs to be given greater importance offshore financial transactions onshore
sal ‘on-tap’, no serious application has and added that it may not always be and "the presence of HSBC Bank has
been received for floating banks. concentration of ownership which can further strengthened the IFSC ecosys-
cause troubles.
The comments come in the backdrop tem of India".
of the RBI forming an internal working He said professionals can also leverage Gandhinagar-based GIFT City is India's
group to look into private bank own- their standing in the market and can first operational smart city and Inter-
ership and control earlier this month, help set up a bank, but was quick to national Financial Services Centre
which will look at promoters’ holding, add that the experience with this has (IFSC).
requirement of dilution, control and been mixed with a few cases being
voting rights of private banks. successful and others not so. To a query The banking business at GIFT IFSC has
“In my view, obviously, such a serious on consolidation, Gandhi also said that seen a quantum jump in last few years
and 13 banks have set up their IBUs at
stake as 26 pc for a promoter or a stra- India is too large a country both geo-
tegic investor will certainly be good for graphically and also when looked at GIFT IFSC.
the long term interest of the bank and from a diversity perspective, and The cumulative business in banking
banking industry,” Gandhi said, speak- hence, we require all sizes of banks vertical has crossed USD 28 billion.
ing at a seminar organised by EPS, a which serve each one’s needs. Amid GIFT IFSC Banking Units have played a
payment system company. the crisis like the COVID-19 and be- pivotal role in the development of IFSC
yond, fully digital banks should also
He was quick to add that a bank holds in India by providing dollar financing to
public deposits which have to be repaid receive greater thrust, he said. Indian corporates, the release said.
on maturity or when demanded, and Apart from banking, insurance and in-
hence, certain “ringfencing” has to be HSBC gets in-principle nod ternational exchanges in GIFT IFSC
done to protect interest. Citing the to set up IFSC Banking Unit have also seen an upward trajectory in
relaxations given to Kotak Mahindra their business, it added.
Bank, where the promoter group has at GIFT City
been allowed to hold 26 per cent stake The Hongkong and Shanghai Banking Headquartered in UK, HSBC serves
in the long term but will have its vot- Corporation (HSBC) has got in-principle customers worldwide from offices in 64
ing rights capped at 15 per cent, approval from the GIFT SEZ Authority countries.
Gandhi said the RBI can look at similar to set up an IFSC Banking Unit at GIFT
moves. ICICI Bank Uses Satellite
City, subject to other regulatory ap-
He also suggested other aspects like provals, a release said. Images For Farm Loans To
enhancing the powers for independent The proposed commencement of the Cut Costs
directors, limiting the promoters’board banking unit by HSBC marks a signifi-
seats and their ability to influence de- cant development in India's IFSC busi- ICICI Bank has begun using satellite
cision making. “The primary problem, ness and proves GIFT's mettle as a glo- images of farmland to help assess
we had seen before nationalisation as bally competitive international finan- farmers' credit-worthiness, a move the
well, is that there is conflict of inter- bank says is helping cut travel costs and
cial centre, the joint release by HSBC
est, diversion of funds, easy influencing make faster lending decisions in a
of the credit decisions of the bank and GIFT City said. world hit by the COVID-19 pandemic.
based on interest of groups rather than "Our proposed IFSC Banking Unit (IBU) The lender, India's fourth largest by
depositors,” Gandhi highlighted. at GIFT IFSC, subject to other regula- assets, is using pictures taken from

6 | 2020 | JULY | BANKING FINANCE