Barclays bets on India again with $400 million infusion for banking, wealth businesses

By Nupur Anand and Chris Thomas

BENGALURU (Reuters) -Barclays said on Thursday it is pumping in more than $400 million into its India arm to tap rising corporate and investment banking activity in the country that is now recovering from the pandemic.

This is Barclays' single largest capital infusion in its Indian business in the last three decades. It comes after the British lender pulled out of the retail business in Asia's third-largest economy in 2011 and exited its equity investment business in 2016.

Barclays said the investment would help grow its corporate and debt investment banking, as well as private clients businesses.

Revenue from investment banking in India so far this year was $498 million, versus $339 million in the same period last year and $538 million in 2020, according to Dealogic.

Barclays leads India's debt capital market by USD bond volume, with a year-to-date share of 14%, according to Dealogic. Rivals such as JPMorgan and Standard Chartered have a share of 13% each, while HSBC has 12%.

"As economic activity gathers momentum, there is increased demand for capital from clients," said Jaideep Khanna, Barclays country CEO for India.

Barclays India mainly lends to corporates with exposures largely to highly rated clients and subsidiaries of multi-national companies, according to Fitch unit India Ratings & Research.

"Last year was a very good year for debt capital market in India, particularly as domestic bank credit didn't take off much. There was a lot of interest in global credit and the overall market has been robust," said Ananth Narayan, associate professor of finance at S.P. Jain Institute of Management and Research.

With the fresh capital infusion, Barclays India's Tier-1 capital has increased by 55%.

"According to central bank norms, there are limits placed on what a lender can do with respect to their balance sheet, but now that the bank's overall capital base has expanded, its ability to lend more has increased," according to a source familiar with the matter, who did not wish to be identified as he was not authorised to speak to the media.

Barclays inaugurated its international banking unit branch at GIFT City in the western state of Gujarat in February, as part of its expansion plans for India.

($1 = 74.2600 Indian rupees)

(Reporting by Chris Thomas in Bengaluru and Nupur Anand in Mumbai; Editing by Subhranshu Sahu and Shounak Dasgupta)