Barclays ready to take $200m hit in retail foray here

NEW DELHI: At a time when Indian banks are being discouraged from sub prime lending, it is learnt that UK-based Barclays is looking to start both prime and sub prime mortgage businesses in India. The bank, which is learnt to have kept aside $200 million to fund initial losses in its retail operations in India, will also go solo in its credit card foray. It was earlier said to be in talks with several players including Life Insurance Corporation for a co-branded credit card.

“The bank has aggressive plans for its retail operations in India including credit card and mortgage and is also prepared to take losses to the tune of $180-200 million in its initial retail foray,” said an industry source.

While prime lending means banks and non-banking financial companies lend to individuals with a certain level of credit worthiness, a mortgage to a borrower with a less-than-perfect credit report is known as sub prime mortgage. Historically, sub prime borrowers have either missed payments on debt or have been late with payments and are thus charged a higher interest rate to compensate for potential losses.

“We appreciate your getting in touch with us for the article, as of now we cannot comment, however we will keep you posted on developments at Barclays,” said a Barclays spokesperson. Sources in the industry say Barclays is planning to enter the credit card market in India over the next two months. Barclaycard is the single biggest branded credit card operation in Britain, with 11.2 million card holders and about £25 billion lent out at any one time.