Bank taps into Kashmir's hidden potential
Anuj Chopra in Srinagar
Two years ago when private bank HDFC announced its plan to open a branch in Kashmir, many of South Asia's financial analysts blanched. No private financial institution was willing to risk investing in a conflict zone often rattled by bomb attacks.
'Many were scared to come to this dangerous place,' Zubair Iqbal, the assistant vice-president of HDFC Bank, said in his smart office in central Srinagar. 'We dared.'
That daring is today earning the bank rich dividends. The branch now has more than 8,000 accounts and has fetched business worth nearly 2.5 billion rupees (HK$451 million).
This year, the bank plans to open five more branches in the state, two in Baramullah and Pulwama, both districts rife with militants. HDFC hopes to cash in on a rich orchard-owning clientele that has long suffered the lack of a full-service bank.
Kashmir's woes, which have cost thousands of lives amid a 17-year insurgency, have failed to cripple the region's economy.
Kashmir's growth rate of 5.5 per cent lags well behind India's national rate of 9.2 per cent, but Indian statistics also claim that in the rural and urban areas, only 3.97 per cent and 1.98 per cent, respectively, of Kashmiris live below the poverty line. Nationwide, the figures are 27.09 per cent and 23.02 per cent.
More than the threat itself, the perception of threat dissuades the world from looking at Kashmir as an investment option, says Jehangir Raina. 'Once that perception breaks, you find potential here,' he said.
I-Locus, his Srinagar-based IT research company, has secured international clients including Microsoft, Wipro and Cisco.
Two years ago, when this Kashmiri Non-Resident Indian (NRI) from Britain chose to set up business in his birthplace, the move seemed tantamount to professional suicide.
In fact, Mr Raina nearly sublet a place in Bangalore before he decided to give Kashmir a try. And, as he noticed, the place offered some head-start advantages.
One, the workforce came considerably cheaper - nearly at half the rate in other Indian cities. Two, setting up a business infrastructure was cheap and relatively free of red tape.
About 10km from Srinagar is Rangreth, a huge high-security industrial estate that houses 189 business and industrial units, including I-Locus.
Set up in the mid-1990s, it was intended to woo businesses. But, as desolate units bear witness, some packed up over the years because of militancy. In the last couple of years, some as enterprising as Mr Raina are exploring opportunities there again.
According to government statistics, Kashmir has 183,000 highly educated young jobseekers.
'This is a state with talented human capital,' said Usmaan Ahmad, a Kashmiri-US business analyst who plans to set up a large outsourcing operation in Srinagar. 'We need more business activity here. There's no doubt the place has great potential despite all its troubles.'
Banking on security
Financial analysts doubted the wisdom of opening a bank in a conflict zone
The number of accounts opened with HDF 8,000