In an exclusive conversation with Nisha Poddar from Sunil Kaul, Managing Director and Financial Services Sector Lead – Asia at Carlyle Group, expressed optimism about the growth potential of India’s banking sector, provided effective risk management and business models are in place. Emphasizing the robust deal pipeline, Kaul sees a significant opportunity in the discontinuous change in India’s financial services consumption. Carlyle Group has made substantial investments in India, exceeding $6 billion, particularly in financial services entities like PNB Housing Finance and YES Bank. Kaul, buoyed by the successful exit from SBI Cards, remains bullish on the present portfolio.
Speaking about YES Bank, Kaul commended the institution’s achievements, noting growth in deposits and strategic repositioning from wholesale lending to retail and SME sectors. Carlyle views YES Bank as well-positioned to capitalize on the expanding financial services consumption, especially in the underserved SME lending space. Regarding PNB Housing Finance, Kaul acknowledged its successful repositioning and focus on retail lending, citing the larger investment in the rights issue as a testament to Carlyle’s confidence in the company’s potential.
Kaul identified affordable housing finance as a growth driver for PNB Housing Finance, emphasizing its significance in the overall business mix. He urged a critical examination of valuations in this competitive sector, noting the segment’s attractiveness due to perceived gaps in service by traditional banks. Carlyle’s past ventures in India’s financial services sector include HDFC, Repco Home Finance, India Infoline, SBI Card, and SBI Life Insurance.
On the global front, Kaul highlighted concerns about high inflation, rising rates, and geopolitical tensions. He noted that valuations must adjust to these global economic factors. Assessing the financial services sector’s impact, Kaul acknowledged its high shock absorption capabilities due to liquidity but expressed difficulty in foreseeing compelling factors leading to a turnaround in the interest rate cycle.
