Goldman ramps up credit business in India, targets diaspora

By Preeti Singh and Baiju Kalesh

Goldman Sachs Group Inc. plans to ramp up its credit business in India and sees an increasing opportunity to target the nation’s wealthy diaspora as global investors shift their focus from China to what is now the world’s fastest-growing major economy.

The investment bank wants to broaden the range of loans it offers through its shadow banking unit, according to Sonjoy Chatterjee, chairman and chief executive officer for Goldman in India. The firm also plans to get a license to scale up in currency trading, which would allow Goldman to deal with any counterparty such as financial investors, equity customers or a corporate customer, he said in an interview.

Goldman joins Wall Street lenders and private equity giants chasing opportunities in an economy that is forecast to grow 7 per cent in the year ending March. India is already home to the New York-based firm’s biggest overseas office, which houses thousands of workers from quants to software engineers. Goldman tops the league table for India deals this year, according to data compiled by Bloomberg.

“Indian markets have benefited from the emerging market equity flows that have shifted from China, though obviously the China story is not going to go away,” Chatterjee said. 

Credit Push

The credit expansion through the firm’s non-banking financial company comes on top of a private credit fund that Goldman ran on its own balance sheet in the South Asian country, he said. Most NBFCs, often referred to as shadow banks in India, can make loans but not accept deposits.

“This will be more of what we might want to originate and syndicate, keeping only a residual portion,” he said. 

The Reserve Bank of India last year allowed standalone primary dealers, who underwrite primary issuances of government bonds, to offer all foreign-exchange products to users. The move was made with a view toward strengthening the role of the standalone dealers as market makers, on par with banks operating primary dealer business, the central bank had said in a statement.

The country had seven standalone primary dealers as of 2020, including Goldman Sachs (India) Capital Markets Pvt., PNB Gilts Ltd. and Morgan Stanley India Primary Dealer Pvt. PNB Gilts had said in its annual report earlier this year that it had been granted the license to operate in the FX market.

“We couldn’t trade the currency in India because we are not a bank,” Chatterjee said. “So that’s another area we want to scale up.”

In wealth management, many Indian entrepreneurs have moved abroad during the pandemic, which has created a “more prominent” opportunity to serve such clients from offices in Singapore, London and Dubai, he said. 

Private Equity

Chatterjee, who joined Goldman Sachs as a partner in 2010 after spending 16 years at India’s ICICI Bank, said private equity firms are looking to deploy a substantial proportion of the capital they’ve raised for Asia funds in India. That in turn is likely to fuel dealmaking in the country in future.

“Private capital continues to remain very hungry to invest,” he said. “When you have a large Asia fund of $8-10 billion, India is the most obvious destination.”