Looking at double-digit growth for SME banking in India, says Xie Wen

India is one of the largest small and medium enterprise (SME) hubs for London-headquartered Standard Chartered (StanC) Bank. Xie Wen, global head of SME banking at StanC, speaks to Subrata Panda and Manojit Saha in Mumbai about the bank's SME portfolio in the country, growth prospects, the impact of tariff-related uncertainties, and how the bank has supported its SME clients in navigating this challenging period. Edited excerpts:
How much of the SME banking revenues come from India?
In terms of revenue, it is 18–20 per cent. But in terms of assets, it is close to 40 per cent. It is the biggest in terms of SME assets. India is a big market for StanC, and it is also its fastest growing market for the SME segment, as India is the fastest growing economy in the world.
In India, which are the business segments in SME banking where you are seeing maximum growth?
Trader working capital. We are growing in double digits. SMEs are usually part of the supply chain of multinational and larger corporations. The working capital loan helps them manage their operating cycle and cash flow much better. So we do see that, with business activity and the economy growing, the need for working capital loans is also growing.
Which are the sectors among SMEs that you are more bullish on?
We are actually quite diversified across different segments — trading, manufacturing, services, and information technology. But I see that in India, manufacturing is certainly growing, and services continue to be a very important and big driver of the economy.
How is StanC affected by the increasing stress in unsecured lending to businesses and SMEs?
Our portfolio is holding up very well. We continue to invest in data and digital capabilities. India has very good credit bureau infrastructure — both the commercial bureau and the personal bureau. When we do underwriting, we look into bureau data.
We also plug into the goods and services tax, where you get a sense of how businesses run. We also have strong monitoring capabilities for understanding how businesses are doing. So our business is performing well.
SMEs are more vulnerable to business cycles. Are you concerned about asset quality, given the current circumstances?
In general, SMEs are more vulnerable everywhere to market uncertainties, volatility, and stress. The bank needs to be dynamic in understanding the market. We also have to be more dynamic in investing in digital capabilities because if you don't enhance your tools and investment to get the latest data, you will be left behind.
SMEs are the core of the economy, so any volatility in the market will affect them. But it's important for banks to continue to invest in capabilities to support them, to understand the risk, and to manage the data and information asymmetries.
What is the growth you see in this segment going forward?
I will be looking at double-digit growth for India.
Globally and in India, how have your SME clients been impacted due to tariff related uncertainties?
I think globally it's not just SMEs that are concerned — big multinationals are also worried. The concerns are around supply chain reliability and rising trade costs. At the same time, we see our region doing relatively better because there is huge trade within the region. So I see a lot of businesses looking to diversify. We are seeing an increase in trading within Asia, and between India and West Asia and the Association of Southeast Asian Nations. We are also seeing businesses looking to diversify their supply chains.
So, to some extent, India will benefit from the China+1 phenomenon. India also has the benefit of a huge, growing middle class. So we are very positive about urbanisation. The growth of the middle class will help propel consumption, and that will be another engine for growth. Uncertainty is there, and challenges are there. These have certainly increased this year globally, but I think those who do will be relatively better off — and that is where more opportunity will come from.
Unlike in other regions, in India you cannot offer interest on current account offerings. How do you navigate this challenge in SME banking?
It's actually a level playing field. Everyone is subject to the same regulations. In this environment, you have to grow the business by doing a few things. You need to provide good service. It is online banking — we call it S2B, Street to Bank. So that is the platform we provide to SMEs, where they can manage their liquidity.
For SMEs, we provide direct data linkages to the enterprise resource planning system, which helps them with efficiency. We provide them with good advice. Service, capabilities and tools, and advice are three key things.
Have you seen a slowdown in activities in SMEs?
I saw a bit of a slowdown at the beginning of the year because of uncertainty related to tariffs. The cost of funds was a challenge. But I see that improving now. There is good movement on interest rate cuts by the Indian regulator. At the same time, we see that, given the developments in the tariff space, activity is picking up. The second quarter has certainly picked up.
What are the strategies the bank has adopted to allay the fear of its SME clients?
Stay close to the clients; have dialogues, work together with them. So far, our clients have weathered this uncertainty pretty well.
It will be difficult for us to give a breakdown. But in India certainly it's quite significant.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Time of India

3 hours ago

• Time of India

Indian auto industry chart magnet supply chain plans

NEW DELHI: As Indian auto industry faces a magnet supply crunch, following restrictions placed by China, a group of companies, including some homegrown advanced material entities, have come forward to build in-house supply chains. Tired of too many ads? go ad free now The companies have made presentations to govt, including the heavy industries ministry, and assured building of supplies within India to reduce dependence on China. "The companies include Midwest Advanced Materials, Entellus Industries, and public sector Indian Rare Earths (IREL)," sources have told TOI. The sources said that heavy industries secretary Kamran Rizvi has also taken presentations from companies as govt develops strategies for indigenous capabilities in magnet production. "Midwest Advanced Materials made a presentation about their plans to produce rare earth magnets in India with a capacity of 500 tonnes per annum. They forecast that by end of 2026, they will be able to produce custom-made rare earth magnets for the industry," one of the sources said. Entellus, a UK-headquartered company with primary operations in India, also made a presentation to govt, detailing their plans to produce rare earth magnets. "They have told officials that their plant is ready to produce the magnetic powder but will still take some time to produce industry-grade magnets," the source said. IREL, which was among the last to make its presentation, informed govt that once production begins, they will be able to match China's rates. "However, the company said that ore present in Indian geography is 100 times less than in China, the US, and Australia," the source said. Tired of too many ads? go ad free now Companies also told govt that magnet production in India was shut down over the past two decades due to proliferation of cheaper Chinese supplies. "The industry members requested govt to support companies in setting up magnet production by providing incentives and monetary benefits," the source said. Secretary Rizvi told the companies to make "realistic statements about magnet production" as potential customers in the auto sector will suffer due to incorrect assessments. The has also requested potential local producers to provide a firm timeline on supplies, if possible, emphasising that their production line depends on quick procurement. The situation for the auto industry has deteriorated over the past few months as no Indian auto component or vehicle company has managed to get approval from the Chinese govt for procuring rare earth magnets. Also, there has been "no clarity as yet" on any timeline for a confirmed meeting with representatives of Chinese govt, despite intervention of Indian officials. The applications for sourcing magnets have been filed mainly by parts manufacturers who provide fully-built sophisticated component assemblies such as speedometers, electric motors, e-axles, electric water pumps, automatic transmission kits, speakers, sensors, and ignition coils (used in engines). The request for a meeting with Chinese representatives is being pursued not just by industry bodies of component makers (Auto Component Manufacturers Association) and vehicle manufacturers (Society of Indian Automobile Manufacturers), but also facilitated by officials in ministries.

Business Standard

4 hours ago

• Business Standard

GSI team to visit Zambia to map and explore copper blocks this week

A five-member team of the Geological Survey of India (GSI) and Mineral Exploration and Consultancy Limited (MECL) will visit Zambia this week to map and explore copper blocks, a top official said. This is part of India's national critical minerals mission (NCMM), which aims to extend support to Indian public and private sector companies for mapping and exploration of critical mineral assets in resource-rich countries. Critical minerals are essential for clean energy technologies like solar panels, wind turbines, electric vehicles (EVs), and energy storage systems. India heavily depends on these imports to meet its domestic needs for lithium, cobalt, and nickel. The demand for these minerals is estimated to more than double by 2030. 'A few days ago, we finalised our Zambia visit. A team of five geologists, including one from MECL, has left for Zambia for mapping and taking the exploration to the next level. The focus is on their copper at this moment, but we will see what else we can find once we are there,' GSI director general Asit Saha told Business Standard in New Delhi. 'The block size is around 9,000 square km. We will be working over a period of three years. It is a reconnaissance visit to set up logistics on ground and the area will be finalised later,' he added. The Zambian government agreed to give 9,000 square km to India for exploration of cobalt and copper, mines Secretary V.L. Kantha Rao had said at a press conference in February. India is exploring mining of critical minerals in Zambia, Congo and Australia, Rao said. It aims to secure raw materials such as lithium under the NCMM. In January, India launched the NCMM to establish a robust framework for self-reliance in the critical minerals sector. Under this mission, the GSI has been tasked with conducting 1,200 exploration projects from 2024-25 to 2030-31. However, the GSI head said that the number of exploration projects will be more than 1200. The Kolkata-headquartered GSI had said in January that it charted an extensive roadmap for the 2025-26 field season with around 1,065 scientific programmes. They include 402 mineral development projects and a 16 per cent jump in the number of critical mineral initiatives. The government approved ₹163 billion ($1.88 billion) to develop the critical minerals sector. All these started with lithium in Jammu and Kashmir. The government, in February 2023, found its first lithium deposits there with estimated reserves of 5.9 million tonnes. It failed to get any bids to auction mining rights in the state. In November 2022, India identified 30 critical minerals, including lithium, as critical for its energy transition efforts and to meet the growing demand from industries and the infrastructure sector.

Time of India

4 hours ago

• Time of India

'Standard Chartered is betting on SMEs in India to help grow wealth management business'

Standard Chartered (StanC) is building its small and medium enterprises (SME) business in India to create a supply line for its wealth management business even as the British lender adjusts to regional frontiers in an increasingly deglobalised world, a top global executive told ET. Xie Wen , global head, SME banking , who has been with the bank for 27 years in different leadership positions, said that as wealth management is a key area for the bank, the SME business becomes a crucial feeder for the lender focused on Indian and Chinese clients. "In our region, especially in Asia, wealth creation (happens) in SMEs. Over the years as we build trust with the promoters we can really cross-sell into wealth. We also have to figure out collaboration between SME relationship managers (RMs), wealth RMs and investment managers. So SME (business) can become a very integrated part for our wealth business," Wen said. StanChart CEO Bill Winters has said that the bank will double investments in the wealth management business and reshape its mass retail business to focus on developing the pipeline of future affluent and international banking clients. StanC banks 100 billionaires of Indian origin across the world and about 30% of the net new money inflows in 2024 came from this said the SME business in India has been expanding in double digits (percentage) for many years and the bank expects it to continue to grow at that pace. She declined to give the book size globally or in India. "India is going through urbanisation which is a great opportunity. Growth of the middle-class propels consumption which will become the engine of growth. Global supply chain diversifications together with policy support and a growing market are big drivers. For example, Apple is producing phones in India which will bring its supply chain and enhance manufacturing capabilities," Wen said. Wen said StanC is banking on its international network especially in Asia and Africa. "Globalisation is being replaced by regionalisation. That is happening within Asia and also intra Europe. Where there are challenges, there are opportunities. For StanChart our biggest markets are in Asia and Africa where activity is increasing and we are well positioned to take advantage of," she said.