Naina Lal Kidwai, Group General Manager and Country Head of HSBC Group Companies in India, says HSBC’s retail foray in India has been very successful. She also tells Bloomberg UTV’s Editor-in-Chief Govindraj Ethiraj that even though the bank did take some hits during the downturn, the cautious approach of the bank in good times helped it in bad times.

Edited excerpts:

I presume it’s been a good New Year compared to the previous one...

Kidwai: Well, it certainly has a much better feel to it. We have to see how it unfolds and I’m quite hopeful that we will be much better than we were last year.

Can you paraphrase in the context of how HSBC’s own banking businesses have evolved and changed as opportunities have offered themselves?

Kidwai: A decade of any corporate or bank in India has to reflect the decade of the country’s performances. Fortunately, it has been a fantastic decade for India and the growth rates of India have reflected the growth rates of corporates and every one of its constituents. HSBC, as a bank operating in India, has clearly benefited from it on two counts: one, in terms of the business we do and secondly in terms of the businesses we do with all the companies that come and go out of India because of the special place that we have as a bank. We have a footprint across all the countries of the world.

We are the banker to many of the large companies.… We have hand- held many in their entry into many other countries. We have helped them to understand that country, and in some cases, even led some by their nose, showing them the M&A opportunities that existed there and then of course going on to fund some of them.

So if I have to split the decade into two parts, I would imagine that the second decade is where most of the opportunities presented themselves. How would you look at the first part of the decade?

Kidwai: I think a lot of things just don’t happen in the later half of the decade. The seeds were actually shown in the earlier part. Yes, if you are asking me, the early 90s  were still an issue. By the time we were into this decade, companies have begun to do things. Acquisitions were happening… the comfort levels were growing and those deals are often the toughest… … the first 100 million dollar disinvestment is much tougher than the ones that you go on to do. This may be much larger, but the fact is that the stage has been set…

What about retail consumers? I mean has HSBC as aggressive with that constituency in the last decade?

Kidwai: Well, I think the latter half of this decade from 2005 on, the journey was one which was very much marked by large retail foray. We remain a large wholesale bank in the country and outside the country. The retail foray was really the one that started in 2004-2005 and contributed to a very high pace of growth, which were notching about 45-55% YoY growth in revenues and profits…

What was the most difficult moment of the last decade?

Kidwai: I think the whole credit process, where we have some strange responses over the last two years… we saw a whole area of correction and a very tough one to actually go out and collect money. It became bad some how… even if you are doing it in a disciplined way, you could still be sitting with a bunch of goons and people just didn’t want to repay.

So, I think the challenges have come exactly in that sector in the retail sector. Big challenge is, of course, being the global environment. After all, we have a large number of SMEs and exporters who would have typically been funded by banks… some of these companies were badly hit and some of the relationships have gone back many, many years. So to support them through thick and thin are some of the challenges which many of us faced in this downturn. We were fortunate that India was not so linked to the rest of the world as to suffer inordinately. There are sectors that have suffered a lot.

And would HSBC, like so many organizations, have to face the problems of a global shock to the extent that you had to roll back some of them in India as well?

Kidwai: We have been fortunate as far as global banks go… we have proceeded with caution in good times and that has helped us in bad times. This is not to say we were not affected. We did take in the US, but we were very fortunate to continue to remain hugely profitable and well capitalised through the shock… so we did not have an inordinate amount of problem. Clearly, our rights issue in the early part of the year demonstrated the phenomenal support of our shareholder base.