Sands, who is on a two-day tour of India ahead of the bank's global board meeting in Delhi this month-end, spoke to Shyamal Majumdar and Rajendra Palande on the impact of the sub-prime crisis and the bank's strategy in India which contributes 16 per cent to Stanchart's global revenues. Excerpts:

What's your assessment of the impact of the sub-prime turmoil on India?

At the moment, the impact has been very limited. A banker sitting in New York or London is viewing things very differently from the way his counterparts in Mumbai or Shanghai or Hong Kong are. People in London or New York find it hard to understand why the stock markets here are booming. I suspect some of the financial flows coming to India are actually related to what's going on in the western financial markets and it's obvious that international investors are looking to rebalance their portfolios. People see the opportunities in India with the GDP growth providing investment opportunities. But I think it's dangerous to get complacent and to assume there won't be any impact.

The more difficult question is whether the sub-prime crisis would translate into a slower economic growth in the US and what would be its impact on emerging economies. It will have some impact on the export sectors of the Asian economies. But I must add that the underlying dynamics and drivers of growth in India and China are resilient enough to withstand these shocks.

Indian markets have seen several chart-busting M&A deals and IPOs. Do you see a slowdown now?

I think you will see a slowdown in the leveraged deals but good corporate transactions will continue. People will obviously take time to get used to what's going on in the financial markets in the West. But I think international expansions will continue - be it Indian companies going international or international companies coming into India. The reality is we can still finance good transactions. For example, the RTZ and Alcan deal happened in the middle of August when the sub-prime crisis was at its peak.

In fact, this kind of dislocation in financial markets actually creates new opportunities even for Indian companies. Deals like Tata-Corus have been well received and will continue to receive support from the banking and financial markets. Transactions with a good commercial logic will continue to be supported.

Do you think the crisis will put the brakes on highly leveraged buyouts?

There would be a slowdown in highly leveraged transactions. The economies of acquisitions will change. In any case, as an institution we are not involved in highly leveraged transactions.

Your bank has limited presence in Europe and the US. Isn't that a constraint for banks like yours at a time when Indian companies are increasingly going overseas?

In fact, I see this as an opportunity. We are building our presence in the Americas and Europe in a very focused way. We don't want to do domestic banking in America or Europe, but do want to expand our ability to support trade flows and investments into Asia. And the recent acquisition of the American Express Bank gives us a significant presence in continental Europe and the US.

Your consumer segment hasn't grown as much in comparison to your corporate business.

It hasn't grown as fast. But when you have two businesses, they never grow at the same pace. And even within the two segments, some sub-segments are growing at different rates. But I am very satisfied that we are growing our overall banking business rapidly in India.

Do you see India becoming the largest contributor to Stanchart's profits and revenue?

If you move the clock forward and look at the future of the bank, then India and China are going to be the two largest markets for us. And we have grown our revenues and profits very rapidly - 50 per cent in the first half of 2007. I continue to see India as one of the most powerful engines of growth for the bank. That's why I am here and am continuously talking to the team here on business plans. India has a little bit of catching up to do with Hong Kong. But the potential here is immense. We are planning a mega-infrastructure fund for India though it's too early to talk about it.

Do you see a retail bubble in India?

As bankers we have to be extremely vigilant when consumer credit markets grow very, very rapidly. We have the advantage of having been through many different markets and seen various crises at different periods as a result of rapid growth. We have learnt a lot about how to navigate and grab opportunities and be careful about potential problems. It's a risk, no doubt, but something that banks in India and the regulator have to tackle.

Branch expansion has been a problem for banks like yours. What's your post-2009 strategy?

I don't really know what the environment will be after 2009. We are very happy to work within the regulatory framework as it is now and as it evolves. We would love to have more branches as we want to have a broader reach across India. As for acquisitions, in principle, we would be interested in making them.

What are the other constraints you face, apart from limited branches?

One of the biggest challenges is attracting and developing talented bankers. Of Stanchart's 65,000 people worldwide, the largest number - 17,000-18,000 - are in India. It's a very competitive market and our main challenge is to create the environment in which people would want to join us. We are growing rapidly in China and there also, the single biggest challenge is people. Salaries have skyrocketed, yes, but we have to be competitive.

Are you in takeover mode with the turmoil affecting a number of financial institutions around the globe?

We did four transactions in the last six weeks or so. So, we have been quite busy in terms of acquisitions. I am not sure whether it will throw up direct opportunities because we will not be interested in buying those involved in US sub-prime. That's not our business focus. But indirectly, it may create more opportunities. What it might do is change the dynamics in terms of who your potential partners are. I don't think it will make a fundamental difference to us as most of the things that we would be interested in acquiring would be in Asia and West Asia. Our strategy is actually not based on acquisitions. In terms of revenues, 70-80 per cent of our growth has come through organic growth and we do acquisitions in order to give us new platforms.

Have you heard from the Indian government on your application for a PIO status?

Not yet. But I applied for purely personal reasons. I visit the country often and have fond memories of a country where my mother was born and studied. There is nothing more to it.