India has managed war disruptions better than many other economies: P D Singh
How do your customers react to conflict?
We did not see any major disruption in our agreement process. Transactions with little dependence on the region have either been completed or are on track. Some deals have been delayed due to market factors such as pricing, availability or relevant jurisdictions. Transactions directly linked to West Asia are pending. From a customer risk perspective, we have divided customers into different groups depending on whether they are affected by currency volatility, commodity prices or supply chain disruptions. At this stage, what really matters is availability rather than price. We are focused on supporting enterprise customers; some have cross-border issues, while others face domestic challenges.
What supply chain disruptions do they face?
What we are seeing goes beyond first-order supply chain disruptions. The greater risk lies in second-order effects that are not yet fully visible. For example, a supplier affected by energy input shortages may create cascading disruptions further down the supply chain. Some customers have sought financial support or postponed large transactions, but overall the disruption is global. Compared to many regions, India is relatively well placed and has handled the situation better than many economies.
What would be the impact of the war on the banks?
My personal opinion is that this situation will not last very long. If prolonged, the second-order supply chain impact will become more visible and different sectors will be affected differently. Banks and companies have already calculated oil prices and their effects on the economy. The RBI is constantly seeking information from banks, but so far there is no official stress testing directive specific to this issue. At this stage timelines remain uncertain and we expect the impact to be short-lived. How will it affect growth and inflation?
In the near term, growth may be affected as some expansion plans are postponed, and prolonged disruptions could reduce consumption. Historically, a 10% increase in oil prices has resulted in a hit of approximately 0.15% to GDP. Inflation buffers are much stronger today. The inflation gap, which was 4.5-5.5% in the last decade, is around 1.5% with the USA. Food prices remain moderate and overall inflation buffers will help absorb the impact in the medium term.
How was your experience at GIFT City as Standard Chartered is also the payment bank for dollar exchange?
Business at GIFT City has grown so strongly that we have expanded facilities and strengthened teams. Dollar exchange in GIFT City is increasing steadily. We have brought on board a large number of counterparties and transactions have already begun. A key advantage is the ability to pay locally without waiting for US markets to open, making intraday and clear payments more efficient. Since inception, we have facilitated approximately $23 billion in business in GIFT City, including aircraft financing, refinancing of microfinance and education lenders, and enabling regional treasury centers for companies.
How is the wealth management business doing in the midst of war?
So far there has been no direct impact on the asset management business in the short term. Access to markets remains the same. There are different investors with different calls, whether to invest more or to bottom. However, I do not think there is a permanent change that we have witnessed in the asset management field so far.
How do you differentiate yourself in asset management?
As a foreign bank, we are not in a position to appeal to a large number of people… Rather than trying to be all things to all people, we would rather contribute with our cross-border capabilities, foreign exchange, trade and other things we can do for our customers. We have enabled our Standard Chartered Securities through which we can offer non-discretionary PMS services and structured products and close any gaps so the client does not need to go to a third party.
Is there a risk for banks due to the slowdown in public offerings and the decline in the stock market?
IPOs are postponed, not scrapped. Once markets stabilize, India will likely be among the first to see activity resume at more attractive valuations for global investors. Meanwhile, companies can rely more on financing, creating partnership opportunities for banks. Foreign investor outflows reflect a variety of factors, including lower interest rate differentials, rupee volatility, relatively rich valuations and global opportunities such as artificial intelligence elsewhere. Many investors are just booking profits. FDI flows are currently focused on debt rather than equity, but there is a pipeline. We have undertaken more than 25 global promotional tours to market the India and GIFT City story, and the recent involvement of European and UK firms has been encouraging, particularly in relation to FTAs.
What is the biggest challenge for banks right now?
Deposit mobilization. While banks are well capitalized, NPAs are under control, there is a good mix between corporate and retail, new investments have arrived, household savings are increasingly shifting to other asset classes (mutual funds, insurance products, commercial paper and private credit). The color of deposits is changing due to the financialization of households. Market volatility may eventually push conservative investors toward bank deposits.
Think misselling is common?
Misselling is largely a result of incentive structures at banks. This is happening, and banks need to introspect on incentives, training, and guardrails to protect customers. The regulator’s focus is not to stop third-party sales but to ensure adequate protection. Proper systems and controls do not necessarily mean lower volumes, but better management.
