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British Bank of Middle East to merge with HSBC in India

Prakash Chawla in New Delhi

The British Bank of Middle East is merging its operations in India with its parent bank, Hongkong and Shanghai Banking Corporation as part of HSBC Holdings PLC's rationalising and marketing strategy.

The Reserve Bank of India has already been approached for permission to merge three BBME branches with HSBC, a senior bank official said.

HSBC has 23 branches in India and BBME has three branches. While HSBC had bought over BBME long ago, it chose to retain its commercial entity in India for historical reasons. ''In fact, India is the only country in the world where HSBC has retained the entity of BBME,'' the official said.

But now with the increasing competition in the banking sector in India, HSBC sees no reason for continuing with the dual entity. ''It is also part of the rationalising and marketing strategy,'' she said.

BBME has branches in Delhi, Bombay and Thiruvananthapuram which will become the HSBC branches the moment the Central Bank gives its green signal. With the merger of BBME, HSBC will have 26 branches in the country.

With the group making personal banking as one of the focus areas, HSBC is seeking opportunities to open branches in Ahmedabad, Pune and Chandigarh. ''But it all depends on the RBI''. The central bank has been quite conservative in giving licences for new branches to the foreign banks.

In the absence of new branches, the foreign banks are resorting to innovative ways to expand their business without expanding the branch network. HSBC is also expanding its offsite automatic teller machines in and around big cities. It would soon open seven more ATMs in the national capital region. The bank is also resorting to other offsite banking channels like phone banking.

As part of promotional exercise for personal banking, HSBC has invested over Rs 1.50 billion in the last few years. The investment has gone into buying, relocating and refurbishing properties and into state-of-the art banking technology.

Unlike in the past when HSBC had only the deposit products, the bank now offers a lot of lending products. It has also changed and modernised its interest payment system. The RBI has recently allowed it to credit interest into the deposit accounts four times a year as against twice for many banks.

On the lending accounts also, the bank has the technology and a system to rest the repayment on a daily basis. The major products include home loan, car loan, credit card, depository services and asset link-overdraft against shares.

UNI

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