StanChart seeks ties with microfinance providers

Chairman says restrictions on number of branches is hurting growth

NEW DELHI: Standard Chartered Bank plans to expand into rural credit through microfinance institutions.

The UK-based bank said a cap on the number of branches foreign banks can operate in India is limiting growth.

“We would like to open more branches in India, especially in the rural areas but the cap on the number of branches a foreign bank can open is putting a limitation on our growth,” E Mervyn Davies, chairman, Standard Chartered Bank, said after a meeting of the bank’s board in New Delhi on Wednesday.

“Clearly the fact that you do not have branches in India puts limitations…Even with our current branches we have chance to grow,” said Davies.

The banking regulator Reserve Bank of India each year allows a certain number of foreign bank branches to be opened.

Davies said the board meeting looked at the whole area of agriculture finance. “Over the next 10-20 years, we would like to become a pan-India bank,” he said.

Stating that the subprime crisis was the most severe shock in the last 50 years, Davies said the crisis would take a few months to abate. He pointed out that India and China had largely remained unaffected by the crisis.