A RENEWED push by Japan’s biggest banks and other global lenders in India is driving down loan prices with the new players having more appetite for riskier credit, according to the country head for Barclays.
“We are certainly seeing a higher degree of competition from some of the banks, including many leading Japanese banks, who were not necessarily competing for the same set of clients or this kind of risks earlier,” said Pramod Kumar, Barclays’ chief executive officer for India. These banks are deploying “a significant amount of balance sheet now in India”, he said.
Japanese banks including Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group are targeting India and the US for expansion as they free up capital by selling off cross-holdings at home. India’s strong economic growth has fuelled demand for corporate and consumer loans, while companies are raising record amounts in initial public offerings.
MUFG became the top arranger of Indian borrowers’ offshore loans in 2024, tapping demand from tycoons seeking to expand abroad, according to data compiled by Bloomberg. Japanese banks’ loan books have shifted from lending largely to government agencies to becoming bankers for conglomerates such as the Adani Group.
The increased competition could lead to lower pricing on loans, especially after more credit funds entered the market over the last 12 months, said Kumar, whose bank has had a branch presence in the country since 1990.
Barclays is one of the largest UK employers in India, with over 23,000 people spread across its banking, technology and shared services operations. The country was ranked as the third-biggest market by revenue for Barclays in 2023, trailing only the UK and US.
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“It’s very natural for people who wish to build to compete against the incumbents and you end up competing on pricing,” Kumar said. “We have been disciplined and have stayed out of several situations where the risk-reward equation did not make commercial sense.”
Demand for global credit from India is on the rise, he said. About US$41 billion in US dollar bonds and external borrowings by Indian companies mature this year and will potentially get refinanced, Kumar said. The bank also expects to see an uptick in Indian companies seeking US dollar financing, he added.
Relatively low US interest rates will attract companies to borrow via loans and the bond market.
Merger activity will be stronger than last year and the bank expects its structured credit business to continue to grow, said Kumar, who took over the top job in 2023. The bank was active in cross-border financing, and also played a role in rupee financing for Mankind Pharma’s acquisition of Bharat Serums and Vaccines, and for Bharti Telecom’s 111.5 billion rupees (S$1.7 billion) bond sale.
US President Donald Trump’s tariff threats could be a double-edged sword for India, according to Kumar. While tariffs would have a “consequential impact on investments”, in renewables and solar panels poised for export to the US, India will also benefit if investors pivot from China.
“If you focus on your competitive strengths, there is an upside,” Kumar said. BLOOMBERG
