Foreign lender, HSBC is expecting its consumer retail business to remain stagnant in India for the current fiscal. However the bank reported a growth of 15% in this portfolio during the last fiscal.

The announcement came by the bank's chief in India, Naina Lal Kidwai at the time when the government and the RBI is expressing concerns over risk-aversion by foreign and public sector banks.

For the year up to February 2009, PSU banks have recorded a growth of over 25% where as private and foreign lenders have witnessed a fall up to single digit in their loan books on a year-on-year basis as compared to more than 20% growth in September 2008.

Ever since the crisis hit the globe, both the government and the RBI has been taking measures to ease the situations and thereby asking banks to lower the interest rates. However the foreign and the private players have not been following the signals sent by the authorities. In fact these lenders are facing an increased number defaults after the rise in lending during the period up to March 2008.

Kidwai also said that HSBC has witnessed asset impairment in the consumer assets along with higher number of delinquencies in the recent past.

Meanwhile HSBC is also likely to put off its plans to open a non-banking finance company (NBFC). The bank had approached the RBI to receive a license for the purpose but the banking regulator has yet not sanctioned an approval. The bank seems to be relieved by the delay. "We have not yet received the licence from the regulator which, in a sense, has been a blessing for us as we have realized that consumer asset business is not working for others as well as for us," Kidwai said.

Kidwai expects the retail broking business as growth areas in the current scenario. HSBC has even entered into an agreement with Canara Bank and Oriental Bank of Commerce to start a life insurance company that started its operation in June 2008. The company reported a gross premium of around Rs 300 crore until March 2009.

Further Kidwai indicated that the bank would take a cautious approach in its lending and thereby link the credit card issuing and loan disbursement to the data produced by the Credit Information Bureau India Limited (CIBIL).

"The strength of CIBIL data is that, when the total borrowing of the individual in known, it is possible to lend on the basis of individual's capacity. We could start such a thing in India in the next two years. In the rest of the world, there are blacklisting features for defaulters and the fear of getting blacklisted is real," said Kidwai