Like many of its peers, Standard Chartered is fine-tuning its credit strategy. The bank's regional chief executive for India and South Asia Neeraj Swaroop spoke to Shyamal Majumdar and Sidhartha about the restructuring and the bank's India plans in the coming years. Excerpts:

Retail lending is down, after the backlog, there are no fresh projects as regards corporate lending, interest rates are where they are and there is a rise in delinquency levels. So are you changing your strategy?

We were not a very aggressive credit card player and have been cautious for the last two to three years. I am not saying we were smarter, but we were sure that we did not want to chase the high-revolver category, focusing on the higher-end credit card customer. So there is no change in the strategy. On personal loans, where we were slightly more aggressive, there is some rise in delinquencies in the portfolio, though it is much lower than what the industry is seeing.

But the increase is within acceptable norms, so it is not hurting us badly. As a result, we are focusing more on secured loans. We are fine-tuning our strategy as we want to moderate our growth on the unsecured side. We are now doing loans that are more than Rs 50,000.

As a whole, there will be some slowdown, but all sectors will not slow down. Apart from real estate, which will see some slowdown, most industries will continue to invest. We have not learnt of people scrapping their investment plans. There may be delays and moderation, but people are proceeding more carefully. Otherwise, credit growth would have come down much faster.

What will be the ratio between secured and unsecured loans?

The ratio of unsecured to secured loans will be 20:80 for the industry. In our case, it will be 30:70 and the mix will be closer to the industry average.

Is there a change in strategy on the wholesale side?

No, there is no change. With the scenario changing, there will be some impact on all banks, but not equally. We will continue to see growth in revenues as long as the economy is growing, even if people do not borrow as much. Yes, relatively, the demand for some products may change but we are not expecting a huge swing.

On the consumer side, almost 40 per cent of our revenue comes from non-lending which is wealth management, private banking, structured and investment products, deposits and distribution of products like insurance. There is a shift away from equity-led investment products, but asset under management has not come down. Wealth management will be a faster growing segment because the disposable income rises faster than the pace at which the economy grows. The mix may change based on how markets do.

Citi now makes more profits in India than Standard Chartered. So have you lost the number-one slot among foreign banks?

(Laughs) What do you expect me to say? We have been in neck-and-neck competition and they are big players, as is HSBC. We did make more profits till last year. Citi has a good business model. It is good from a psychological point of view, but we have scale, we have grown 30-40 per cent a year. We are quite happy with the way we are progressing.

How crucial is the opening up of the banking sector from April 2009?

The current road map says RBI will review (the position). Our strategy is more focused on organic growth because we have been here long enough and globally we follow the same strategy. From 2009, or whenever it happens, there will be more organic and inorganic opportunities and we want to capitalise on both.

Is it (opening up) critical? I do not think it is, but some opening up will give us new opportunities such as greater freedom to open branches. On the inorganic side, there could be opportunities to take larger stakes in banks or to take management control. If anything of that happens, we will be interested.

How many branches do you want to open this year?

We have applied for over 40 branches, but we have not got a number from RBI so far.

The annual plan is under discussion.

What about plans for India depository receipts (IDRs)?

It's a proposition being considered. Since India is big for us, it is important for us and we are looking at a possible option for an IDR. We are at a stage where we are exploring. We will look at all options (for listing). One option is to do a local incorporation and listing. We will wait for the RBI guidelines to see if there is any benefit to incorporate. If it treats our licensing request the way it does with an Indian bank [Get Quote], then there is an advantage.