We are a global bridge for India Inc: CEO JPMorgan Chase Bank (India)

JPMorgan Chase Bank (India) has come to position itself as one of the leading players on the wholesale and investment banking turf in India, and has, of late, ventured into servicing local mid-cap companies as well. It shares this space with two US-based rivals – Citigroup and Bank of America Merrill Lynch - and with Deutsche Bank, HSBC, and Standard Chartered Bank (StanChart) in what is a highly competitive market for the cream of India’s Inc’s business. If you peel the onion, everyone is serving a different set of customers, says MADHAV KALYAN, the bank’s chief executive officer and senior country officer, in conversation with Raghu Mohan. Edited excerpts:

What’s your view on India, two and a half years after the onset of the pandemic?

As India emerges from the pandemic, and with the robust rebound in gross domestic product, we are seeing Corporate India using this period to deleverage. As we talk to clients, we see four priorities.

One, they are laser-focused on growth and anticipate significant upside opportunities.

Two, navigating volatility is a key focus area. Increased uncertainty as a result of the pandemic and the war in Ukraine is a new reality. We are seeing Corporate India finding ways to mitigate supply-chain stress to be able to withstand future global disruptions.

Three, the pandemic has accelerated innovation and digital efforts. We’re clearly seeing clients focusing on building direct-to-customer digital solutions.

The fourth area of priority is around leading with an environmental, social, and corporate governance mindset. There is an increasing interest and awareness around sustainable financing options - across debt and equity - to help them meet their goals.

Just about every foreign bank (except HSBC and StanChart) here is a wholesale institutional and investment bank…

The level of interest is unprecedented, and foreign banks that operate in the country represent international players – be it institutional investors, financial institutions, or multinationals from different markets. Given the growth story India represents, the country needs as many foreign banks from as many regions to be able to build a bridge between countries.

I don’t think the wholesale banking space is overcrowded. If you peel the onion, everyone is serving a different set of customers and bringing a lot of value to the country. The US is the largest economy in the world and accounts for 40 per cent of the global market capitalisation.  The opportunities cannot be serviced by one bank alone. It requires all large US banks to be present to be able to service these clients and their needs, even as they grow in India.

How do you perceive the market for cross-border commercial borrowings? In January, a Reserve Bank of India (RBI) paper said 63 per cent of the borrowed amount should be hedged. Given the volatility we may see, what’s your view?

Typically, the foreign currency loan markets begin to take off when bond markets become volatile, as is the case right now. Last year, there were over 30 issuances in the bond market; this year, we’ve only seen five or six so far. Clearly these are volatile times and international debt capital markets are asking for larger values than our clients are willing to pay. This is when international loan markets take off in a significant manner.

The question of hedging is bespoke. While the RBI has a general guidance based on the overall industry - and the amount for hedging and unhedged foreign currency exposures at an aggregate level - some will have natural hedges. They can hedge much less than say, those in the renewables industry or state-owned entities where revenue flows are all local.

Very soon, we will probably see a cycle of interest-rate increases in the US. Interest-rate hedging and risk management will also become important, which was not the case for much of the last decade.

How do you look at your India journey thus far?

As our chairman Jamie Dimon says, we go into countries with several 100-year views. We’ve continued to invest in the country. The amount of capital we have put here, the number of people and cities we operate in have continued to grow. Our commitment to develop our business in India has allowed us to become one of the leading foreign banks in the country.

Indian companies are becoming global champions and we will continue to help harness that opportunity for them. Our pool of corporate and institutional clients has significantly grown over three years despite a challenging environment. We will continue to be the premier bank for financial institutions in managing their cross-border flows and payments.

The global connectivity and industry knowledge we bring to clients is unparalleled - whether they are looking at equity, debt, or mergers and acquisitions. We are also doing a lot of work with foreign portfolio investors that need to access India’s growing equity and debt markets.

Over the past three years, we’ve also expanded our commercial banking business to serve local mid-cap companies in India. We believe this business will scale up significantly. We remain committed to our market in India and will keep investing to grow our business and talent pool.