Business Today speaks with Brijesh Mehra, Country Executive (India), RBS, on the bank's strategy in India, its expansion plans and more. Edited excerpts -
Q: What has been your strategy in India?
A: In India, we have been pursuing a cross-border wholesale bank strategy since February 2009. This strategy was reiterated by our new Chief Executive, Ross McEwan, in February 2014 after a periodic review of the bank's strategy. So we help our clients raise money from the market and through our own balance sheet, we help administer and manage their money flows and advise them on managing the risks in their balance sheet across various asset classes.
Q: What is the core of the strategy?
A: Core to this international strategy is our focus on the UK India trade and investment flow agenda, which plays to our natural strengths of being the largest bank in the UK by many metrics and a meaningful foreign bank player in India. We are encouraged by the new majority government and a more benign international economic scenario. We expect that this trade and investment flow agenda will bring incremental investment not only from the UK but also from the rest of the world. As a bank with a cross-border international agenda and one of the largest networks in the world we believe we are in a good position to aid the growth of the economic activity in India.
Q: What has worked for you?
A: We continue to be focused on our strategy. We never went into the market-share game but focused on the satisfaction of our chosen clients by providing them the right advice and products from a long-term trusted partner outlook. Whatever we have achieved here has been entirely due to the faith our clients have reposed on us, the support of regulators and the government bodies and, most importantly, a highly-committed team.
Q: What is your strategy for the year 2014/15?
A: Our strategy is a continuation of what it has been since 2012. As mentioned above the core strategy was set in place in 2009 (and reaffirmed in 2014). We will serve clients through our international cross-border network. We follow our clients.
Q: A little bit about your other business?
A: In India we run a liabilities-focussed, digitally-intensive retail business as well. Here we are trying to use technology to differentiate ourselves. So far the results have been encouraging. This new shift in retail is only nine months old, but we're very happy with what we've seen so far.
Q: How has your asset quality been?
A: In the banking sector, the asset quality has come under stress due to sluggish economy growth. We, as part of the Indian banking system and as part of RBS India, have not been completely immune to that but I think a mixture of picking the right sectors, the right clients, working with clients in stress situations to help them navigate difficult economic situations have improved our NPA position.
Q: How do you work on keeping away NPAs?
A: For a client there are two primary things that we look for. One is intent to repay, and the other is the ability to pay. Because of that approach, that philosophy, I think we have had a relatively benign year (2013/14) in terms of the NPA situation and our outlook for 2014/15 is similar. Intent comes from market reputation, the amount of "skin in the game" a client has, how much equity they put in, past track record and their reputation, their values; so a whole bunch of factors are looked at before we take exposure on a client. The second thing is the ability to repay. We do not believe there are good sectors and bad sectors. We think that in each sector there are winners. Clearly, the skill lies in picking the winners in each sector.