Talk about counterintuitive. India, we’re always told, is the place to be for Western companies who want to move beyond mature markets at home. Now Barclays is scaling back its operations there, selling its $580m loan book and $35m credit card portfolio.
In recent years, it has been the done thing to try to build a presence in the BRICS nations. In practice, it hasn’t proved so easy. A poor understanding of local customs and strict regulations have made it difficult for companies of all hue – from social networking sites to banks – to build a scaleable business in countries like India.
Becoming a banker to India has proved particularly difficult. There are some 80,000 bank branches in the country and just a tiny fraction of them – 306 – are owned by foreign players. In 2010, just 13 foreign bank branches were opened.
The biggest, Standard Chartered, has 94 branches, while HSBC has 50. Barclays is a minnow with just nine. Its decision to rush into India five years ago in search of the next big thing was a mistake, and should serve as a cautionary tale to those firms hoping to cash in on scorching growth rates in foreign climes. firstname.lastname@example.org