Type Public limited company

Traded as LSE: HSBA

SEHK: 0005 NYSE: HSBC

Industry Banking, Financial

services

Founded 1865, Hong Kong1 (The

Hongkong and Shanghai

Banking Corporation)

19911 (HSBC Holdings

plc)

Founders Thomas Sutherland

Headquarte

rs

8 Canada Square,

Canary Wharf,

London, United Kingdom

Area

served

Worldwide

Key people Douglas Flint

(Group Chairman)

Stuart Gulliver

(Group Chief Executive)

Services Cr cards, consumer

banking, banking,

investment, mortgage

loans, private

banking, wealth

management

Revenue US$ 68.18 billion

(2013)2

Operating

income

US$22.56 billion

(2013)2

Profit US$16.20 billion

(2013)2

Total

assets

US$2.671 trillion

(2013)2

Total

equity

US$181.8 billion

(2013)2

Employees 254,066 (2013)2

Subsidiari

es

HSBC Bank plc, The

Hongkong and Shanghai

Banking

Corporation, HSBC GLT

India, HSBC Bank

USA,HSBC Bank Middle

East,HSBC Mexico, HSBC

Bank Brazil, HSBC

Finance, HSBC GLT

Malaysia

Website www.hsbc.com

The Hongkong and Shanghai Banking Corporation

HSBC Holdings plc is a British multinational banking and

financial services company headquartered in London, United

Kingdom. It is the world's second largest bank. It was founded in

London in 1991 by the Hongkong and Shanghai Banking

Corporation to act as a new group holding company.34 The origins

of the bank lie in Hong Kong and Shanghai, where branches were

first opened in 1865.1 The HSBC name is derived from the initials

of the Hongkong and Shanghai Banking Corporation.5 As such, the

company refers to both the United Kingdom and Hong Kong as its

"home markets".6

HSBC has around 6,600 offices in 80 countries and territories

across Africa, Asia, Europe, North America and South America, and

around 125 million customers.7 As of 31 December 2013, it had

total assets of $2.671 trillion, of which roughly half were in

Europe, the Middle East and Africa, and a quarter in each of

Asia-Pacific and the Americas.2 As of 2012, it was the world's

largest bank in terms of assets and sixth-largest public company,

according to a composite measure by Forbes magazine.8

HSBC is organised within four business groups: Commercial

Banking; Global Banking and Markets (investment banking); Retail

Banking and Wealth Management; and Global Private Banking.9

HSBC has a dual10 primary listing on the Hong Kong Stock

Exchange and London Stock Exchange and is a constituent of

the Hang Seng Index and the FTSE 100 Index. As of 6 July 2012 it

had a market capitalisation of £102.7 billion, the second-largest

company listed on the London Stock Exchange, after Royal Dutch

Shell.11 It has secondary listings on the New York Stock

Exchange, Euronext Paris and the Bermuda Stock Exchange.

History

Origins to 2000

The HSBC Main Building in 1901 in Hong Kong, the headquarters of

the Hong Kong and Shanghai Banking Corporation from 1886 to 1933

for its Hong Kong operation.

The HSBC Building in 2005 in Shanghai, the headquarters of the

Hong Kong and Shanghai Banking Corporation from 1923 to 1955 for

its Shanghai operation.

For more information on the history of HSBC prior to the founding

of HSBC Holdings in 1991, see The Hongkong and Shanghai Banking

Corporation.

The Hong Kong and Shanghai Banking Corporation was founded by

Scotsman Sir Thomas Sutherland in the then British colony of Hong

Kong on 3 March 1865, and in Shanghai one month later, benefiting

from the start of trading into China, including opium trading. In

1980, HSBC acquired a 51% shareholding in US-based Marine Midland

Bank, which it extended to full ownership in 1987.

HSBC Holdings plc was established in the United Kingdom in 1991

as the parent company to the Hongkong and Shanghai Banking

Corporation in preparation for its purchase of the UK-

based Midland Bank and the impending transfer of sovereignty of

Hong Kong to China. HSBC Holdings' acquisition of Midland Bank

was completed in 1992 and gave HSBC a substantial market presence

in the United Kingdom. As part of the takeover conditions for the

acquisition, HSBC Holdings plc was required to relocate its world

headquarters from Hong Kong to London in 1993.

Major acquisitions in South America started with the purchase of

the Banco Bamerindus of Brazil for $1bn in March 199712 and the

acquisition of Roberts SA de Inversiones of Argentina for $600m

in May 1997.13 In May 1999, HSBC expanded its presence in the

United States with the purchase of Republic National Bank of New

York for $10.3bn.14

After the British established Hong Kong as a colony in the aftermath of the First Opium War, local merchants felt the need for a bank to finance the growing trade between China and Europe (with traded products including opium).[2][3] They established the Hongkong and Shanghai Banking Company Limited in Hong Kong (March 1865) and Shanghai (one month later).The founder, Thomas Sutherland of the Peninsular and Oriental Steam Navigation Company, wanted a bank operating on "sound Scottish banking principles." Still, the original location of thebank was considered crucial and the founders chose Wardley House in Hong Kong since the construction was based on some of the best feng shui in Colonial Hong Kong.[4] The bank initially leasedits premises for HK$500 a month in 1864.After raising a capital stock of HK$5 million, the Hongkong and Shanghai Banking Company Ltd. commenced operations on 3 March 1865. It opened a branch in Shanghai during April of that year, and started issuing locally denominated banknotes in both the Crown Colony and Shanghai soon afterwards. The bank was incorporated in Hong Kong by special dispensation from the British Treasury in 1866, and under the Hongkong and ShanghaiBank Ordinance 1866,[5] a new branch in Japan was also established. The bank handled the first public loan in China in 1874, thereafter issuing most public loans.Nationalization in the 1960s[edit]Despite the provisions, control and regulations of the Reserve Bank of India, banks in India except the State Bank of India (SBI), continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, the then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization."[7] The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969') andnationalised the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country.[7] Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill,and it received the presidential approval on 9 August 1969.A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the Government of India controlled around 91% of the banking business of India. Later on,in the year 1993, the government merged New Bank of India with Punjab National Bank.[8] It was the only merger betweennationalised banks and resulted in the reduction of the number ofnationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to theaverage growth rate of the Indian economy.Liberalization in the 1990s[edit]In the early 1990s, the then government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and includedGlobal Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamedAxis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalised the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.The next stage for the Indian banking has been set up with the proposed relaxation in the norms for foreign direct investment, where all foreign investors in banks may be given voting rights

which could exceed the present cap of 10% at present. It has goneup to 74% with some restrictions.The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4–6–4 method (borrow at4%; lend at 6%; go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working fortraditional banks. All this led to the retail boom in India. People demanded more from their banks and received more.

2000 to 2010[edit]

The HSBC Main Building in Hong Kong, which was designed by NormanFoster and completed in 1985

Expansion into Continental Europe took place in April 2000 with the acquisition of Crédit Commercial de France, a large French bank for £6.6bn.[15] In July 2001 HSBC bought Demirbank, an insolvent Turkish bank.[16] In July 2002, Arthur Andersen announced that HSBC USA, Inc., through a new subsidiary, Wealth and Tax Advisory Services USA Inc. (WTAS), would purchase a portion of Andersen's tax practice. The new HSBC Private Client Services Group would serve the wealth and tax advisory needs of high net worth individuals. Then in August 2002 HSBC acquired Grupo Financiero Bital, SA de CV, Mexico's third largest retail

bank for $1.1bn.[17] In November 2002 HSBC expanded further in theUnited States. Under the chairmanship of Sir John Bond, it spent £9 billion (US$15.5 billion) to acquire Household Finance Corporation (HFC), a US credit card issuer and subprime lender.[18] In a 2003 cover story, The Banker noted "when banking historians look back, they may conclude that [it] was the deal ofthe first decade of the 21st century".[19] Under the new name of HSBC Finance, the division was the second largest subprime lender in the US.[20]

On 22 November 2001, the Hongkong and Shanghai Banking Corp wouldprovide a fixed-rate mortgage to buyers of Cheung Kong (Holdings)' Victoria Towers residential development.[21]

The new headquarters of HSBC Holdings at 8 Canada Square, London officially opened in April 2003.[22]

In September 2003 HSBC bought Polski Kredyt Bank SA of Poland for$7.8m.[23] In June 2004 HSBC expanded into China buying 19.9% of the Bank of Communications of Shanghai.[24] In the United Kingdom HSBC acquired Marks & Spencer Retail Financial Services Holdings Ltd for £763m in December 2004.[25] Acquisitions in 2005 included Metris Inc, a US credit card issuer for $1.6bn in August[26] and 70.1% of Dar es Salaam Investment Bank of Iraq in October.[27] In April 2006 HSBC bought the 90 branches in Argentina of Banca Nazionale del Lavorofor $155m.[28] In December 2007 HSBC acquired the Chinese Bank in Taiwan.[29] In May 2008 HSBC acquired IL&FS Investment, an Indian retail broking firm.[30]

In 2005 Bloomberg Markets magazine accused HSBC of money-laundering for drug dealers and state sponsors of terrorism. Then-CEO Stephen Green said that "This was a singular and wholly irresponsible attack on the bank's international compliance procedures", but subsequent investigation indicated that it was accurate and proved that the bank was involved in money laundering throughout Mexico.[31]U.S. Assistant Attorney General Lanny Breuer characterised HSBC compliance during this period as "stunning failures of oversight – and worse ... The record of dysfunction that prevailed at HSBC for many years was astonishing."[32]

In March 2009, HSBC announced that it would shut down the branch network of its HSBC Finance arm in the U.S., leading to nearly 6,000 job losses and leaving only the credit card business to continue operating.[33][34] Chairman Stephen Green stated, "HSBC hasa reputation for telling it as it is. With the benefit of hindsight, this is an acquisition we wish we had not undertaken."[35] According to analyst Colin Morton, "the takeover was an absolute disaster".[34][36]

Although it was at the centre of the subprime storm, the wider group has weathered the financial crisis of 2007–2010 better thanother global banks. According to Bloomberg, "HSBC is one of world's strongest banks by some measures".[37] When HM Treasury required all UK banks to increase their capital in October 2007, the group transferred £750 million to London withinhours, and announced that it had just lent £4 billion to other UKbanks.[38] In March 2009, it announced that it had made US$9.3bn of profit in 2008 and announced a £12.5bn (US$17.7bn; HK$138bn) rights issue to enable it to buy other banks that were struggling to survive.[39] However, uncertainty over the rights' issue's implications for institutional investors caused volatility in the Hong Kong stock market: on 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares sold in the last few seconds of trading.[40]

2010 to 2013[edit]

8 Canada Square, the world headquarters of HSBC in Canary Wharf, London

On 11 May 2011 the new chief executive Stuart Gulliver announced that HSBC would refocus its business strategy and that a large-scale retrenchment of operations, particularly in respect of the retail sector, was planned. HSBC would no longer seek to be 'the world's local bank', as costs associated with this were spiralling and US$3.5bn needed to be saved by 2013, with the aim of bringing overheads down from 55% of revenues to 48%. In 2010, then-chairman Stephen Green planned to depart HSBC to accept a government appointment in the Trade Ministry. Group Chief Executive Michael Geoghegan was expected to become the next chairman. However, while many current and former senior employeessupported the tradition of promoting the chief executive to chairman, many shareholders instead pushed for an external candidate.[41][42] HSBC's board of directors had reportedly been split over the succession planning, and investors were alarmed that this row would damage the company. On 23 September 2010, Geoghegan announced he would step down as chief executive of HSBC.[44] He was succeeded as chief executive of HSBC by Stuart Gulliver, while Green was succeeded as Chairmanby Douglas Flint; Flint was serving as HSBC's finance director (chief financial officer). August 2011: Further to CEO Stuart Gulliver's plan to cut $3.5 billion in costs over the next 2 years, HSBC announced that it will cut 25,000 jobs and exit from 20 countries by 2013 in addition to 5,000 job- cuts announced earlier in the year. The consumer banking division of HSBC will focus on the UK, Hong Kong, high-growth markets such as Mexico, Singapore, Turkey and Brazil, and smaller countries where it has a leading market share.[45]According to Reuters, Chief Executive Stuart Gulliver told the media, "There will be further job cuts. There will be something like 25,000 roles eliminated between now and the end of 2013."[46][47]

In August 2011 "to align our U.S. business with our global network and meet the local and international needs of domestic and overseas clients", HSBC agreed to sell 195 branches in New York and Connecticut to First Niagara Financial Group Inc for around $1 billion and announced the closure of 13 branches in Connecticut and New Jersey. The rest of HSBC's U.S. network will

only be about half from a total 470 branches before divestments.[48] On 9 August 2011, Capital One Financial Corp. agreed to acquire HSBC's U.S. credit card business for $2.6 billion,[49] netting HSBC Holdings an estimated after-tax profit of $2.4 billion.[50] In September it was announced that HSBC seeks to sellits general insurance business for around $1 billion.In 2012, HSBC was the subject of hearings of the U.S. Senate permanent subcommittee for investigations for severe deficiencies in its anti money laundering practices. On 16 July the committee presented its findings.[51][52] Among other things it concludes that HSBC has been transferring $7 billion in banknotesfrom its Mexican to its US subsidiary, much of it related to drugdealing, was disregarding terrorist financing links and was actively circumventing U.S. safeguards to block transactions involving terrorists, drug lords and rogue regimes, including hiding $19.4 billion in transactions with Iran.In July 2012 HSBC came under investigation for allegedly assisting in the money laundering of drug dealers[53] and terrorist money[54] for many years, after a probe by the US Federal Reserve and Office of the Comptroller of the Currency found that there was "significant potential for unreported money laundering or terrorist financing".[55][56]

On 11 December 2012, HSBC agreed to pay a record $1.92 billion fine in this money laundering case. "Bank officials repeatedly ignored internal warnings that HSBC's monitoring systems were inadequate, the Justice Department said. In 2008, for example, the CEO of HSBC Mexico was told that Mexican law enforcement had a recording of a Mexican drug lord saying that HSBC Mexico was the place to launder money."[57] The DOJ, however, decided not to pursue criminal penalties, a decision which the New York Times labelled a "dark day for the rule of law."[58]

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again." HSBC Chief Executive Stuart Gulliver said.[57]

A 32-page brochure published on the HSBC website provides detailsof 2012 results in terms of markets, strategies, and businesses, as well as giving an outline of future plans.[59]

In July 2013, Alan Keir was appointed Chief Executive of HSBC Bank plc after Brian Robertson resigned from his post. Keir's duties include overseeing the firm's UK, European, Middle Easternand African divisions.[60]

Since 2013[edit]In June 2014, an indirect wholly owned subsidiary HSBC Life (UK) Limited agreed to sell its £4.2 billion UK pensions business to Swiss Re.[61]

Business development[edit]Sir Thomas Jackson became chief manager in 1876. During his twenty-six year tenure, the Bank became a leader in Asia. Notableevents included being the first bank established inThailand[citation

needed], in 1888, where it printed the country's first banknotes; acting as banker for the Hong Kong government from the 1880s; andparticipating in the management of British colonial government accounts in China, Japan, Penang and Singapore. A period of expansion followed, with new branch offices opening in Bangkok (1921), Manila (1922) andShanghai (1923), and a new head office building in Hong Kong in 1935.

Second World WarIn anticipation of the Japanese invasion of Hong Kong in 1941, the Bank's head office moved to London. During the period 1941-1943 the chief manager Sir Vandeleur Grayburn, and his successor David C Edmondston, both died while interned by the Japanese. Arthur Morse was appointed Chief Manager in 1943 and led the bank after the war. The head office moved back to Hong

Kong in 1946. During the Japanese occupation the Bank's head office building was occupied as the headquarters of the Hong KongJapanese military government.

HSBC Bank in IndiaIn 1959 HSBC acquired The Mercantile Bank of India, London and China, established in October 1853 in Bombay. HSBC is now one of the fastest growing foreign banks in India,[13]both in domestic banking and support operations for worldwide operations

2000 to 2010

The HSBC Main Building in Hong Kong, which was designed by Norman

Foster and completed in 1985

Expansion into Continental Europe took place in April 2000 with

the acquisition of Crédit Commercial de France, a large French

bank for £6.6bn.15 In July 2001 HSBC bought Demirbank,

an insolvent Turkish bank.16 In July 2002, Arthur Andersen

announced that HSBC USA, Inc., through a new subsidiary, Wealth

and Tax Advisory Services USA Inc. (WTAS), would purchase a

portion of Andersen's tax practice. The new HSBC Private Client

Services Group would serve the wealth and tax advisory needs of

high net worth individuals. Then in August 2002 HSBC acquired

Grupo Financiero Bital, SA de CV, Mexico's third largest retail

bank for $1.1bn.17 In November 2002 HSBC expanded further in the

United States. Under the chairmanship of Sir John Bond, it spent

£9 billion (US$15.5 billion) to acquire Household Finance

Corporation (HFC), a US cr card issuer and subprime lender.18 In

a 2003 cover story, The Banker noted "when banking historians

look back, they may conclude that it was the deal of the first

decade of the 21st century".19 Under the new name of HSBC

Finance, the division was the second largest subprime lender in

the US.20

On 22 November 2001, the Hongkong and Shanghai Banking Corp would

provide a fixed-rate mortgage to buyers of Cheung Kong

(Holdings)' Victoria Towers residential development.21

The new headquarters of HSBC Holdings at 8 Canada Square, London

officially opened in April 2003.22

In September 2003 HSBC bought Polski Kredyt Bank SA of Poland for

$7.8m.23 In June 2004 HSBC expanded into China buying 19.9% of

the Bank of Communications of Shanghai.24 In the United Kingdom

HSBC acquired Marks & Spencer Retail Financial Services Holdings

Ltd for £763m in December 2004.25 Acquisitions in 2005 included

Metris Inc, a US cr card issuer for $1.6bn in August26 and 70.1%

of Dar es Salaam Investment Bank of Iraq in October.27 In April

2006 HSBC bought the 90 branches in Argentina of Banca Nazionale

del Lavorofor $155m.28 In December 2007 HSBC acquired the Chinese

Bank in Taiwan.29 In May 2008 HSBC acquired IL&FS Investment, an

Indian retail broking firm.30

In 2005 Bloomberg Markets magazine accused HSBC of money-

laundering for drug dealers and state sponsors of terrorism.

Then-CEO Stephen Green said that "This was a singular and wholly

irresponsible attack on the bank's international compliance

procedures", but subsequent investigation indicated that it was

accurate and proved that the bank was involved in money

laundering throughout Mexico.31U.S. Assistant Attorney General

Lanny Breuer characterised HSBC compliance during this period as

"stunning failures of oversight – and worse ... The record of

dysfunction that prevailed at HSBC for many years was

astonishing."32

In March 2009, HSBC announced that it would shut down the branch

network of its HSBC Finance arm in the U.S., leading to nearly

6,000 job losses and leaving only the cr card business to

continue operating.3334 Chairman Stephen Green stated, "HSBC has a

reputation for telling it as it is. With the benefit of

hindsight, this is an acquisition we wish we had not

undertaken."35 According to analyst Colin Morton, "the takeover

was an absolute disaster".3436

Although it was at the centre of the subprime storm, the wider

group has weathered the financial crisis of 2007–2010 better than

other global banks. According to Bloomberg, "HSBC is one of

world's strongest banks by some measures".37 When HM

Treasury required all UK banks to increase their capital in

October 2007, the group transferred £750 million to London within

hours, and announced that it had just lent £4 billion to other UK

banks.38 In March 2009, it announced that it had made US$9.3bn of

profit in 2008 and announced a £12.5bn (US$17.7bn;

HK$138bn) rights issue to enable it to buy other banks that were

struggling to survive.39 However, uncertainty over the rights'

issue's implications for institutional investors caused

volatility in the Hong Kong stock market: on 9 March 2009 HSBC's

share price fell 24.14%, with 12 million shares sold in the last

few seconds of trading.40

2010 to 2013

8 Canada Square, the world headquarters of HSBC in Canary

Wharf, London

On 11 May 2011 the new chief executive Stuart Gulliver announced

that HSBC would refocus its business strategy and that a large-

scale retrenchment of operations, particularly in respect of the

retail sector, was planned. HSBC would no longer seek to be 'the

world's local bank', as costs associated with this were

spiralling and US$3.5bn needed to be saved by 2013, with the aim

of bringing overheads down from 55% of revenues to 48%. In 2010,

then-chairman Stephen Green planned to depart HSBC to accept a

government appointment in the Trade Ministry. Group Chief

Executive Michael Geoghegan was expected to become the next

chairman. However, while many current and former senior employees

supported the tradition of promoting the chief executive to

chairman, many shareholders instead pushed for an external

candidate.4142 HSBC's board of directors had reportedly been split

over the succession planning, and investors were alarmed that

this row would damage the company.43

On 23 September 2010, Geoghegan announced he would step down as

chief executive of HSBC.44 He was succeeded as chief executive of

HSBC by Stuart Gulliver, while Green was succeeded as Chairman

by Douglas Flint; Flint was serving as HSBC's finance director

(chief financial officer). August 2011: Further to CEO Stuart

Gulliver's plan to cut $3.5 billion in costs over the next 2

years, HSBC announced that it will cut 25,000 jobs and exit from

20 countries by 2013 in addition to 5,000 job- cuts announced

earlier in the year. The consumer banking division of HSBC will

focus on the UK, Hong Kong, high-growth markets such as Mexico,

Singapore, Turkey and Brazil, and smaller countries where it has

a leading market share.45According to Reuters, Chief Executive

Stuart Gulliver told the media, "There will be further job cuts.

There will be something like 25,000 roles eliminated between now

and the end of 2013."4647

In August 2011 "to align our U.S. business with our global

network and meet the local and international needs of domestic

and overseas clients", HSBC agreed to sell 195 branches in New

York and Connecticut to First Niagara Financial Group Inc for

around $1 billion and announced the closure of 13 branches in

Connecticut and New Jersey. The rest of HSBC's U.S. network will

only be about half from a total 470 branches before

divestments.48 On 9 August 2011, Capital One Financial

Corp. agreed to acquire HSBC's U.S. cr card business for $2.6

billion,49 netting HSBC Holdings an estimated after-tax profit of

$2.4 billion.50 In September it was announced that HSBC seeks to

sell its general insurance business for around $1 billion.

In 2012, HSBC was the subject of hearings of the U.S.

Senate permanent subcommittee for investigations for severe

deficiencies in its anti money laundering practices. On 16 July

the committee presented its findings.5152 Among other things it

concludes that HSBC has been transferring $7 billion in banknotes

from its Mexican to its US subsidiary, much of it related to drug

dealing, was disregarding terrorist financing links and was

actively circumventing U.S. safeguards to block transactions

involving terrorists, drug lords and rogue regimes, including

hiding $19.4 billion in transactions with Iran.

In July 2012 HSBC came under investigation for allegedly

assisting in the money laundering of drug dealers53 and terrorist

money54 for many years, after a probe by the US Federal Reserve

and Office of the Comptroller of the Currency found that there

was "significant potential for unreported money laundering or

terrorist financing".5556

On 11 December 2012, HSBC agreed to pay a record $1.92 billion

fine in this money laundering case. "Bank officials repeatedly

ignored internal warnings that HSBC's monitoring systems were

inadequate, the Justice Department said. In 2008, for example,

the CEO of HSBC Mexico was told that Mexican law enforcement had

a recording of a Mexican drug lord saying that HSBC Mexico was

the place to launder money."57 The DOJ, however, decided not to

pursue criminal penalties, a decision which the New York

Times labelled a "dark day for the rule of law."58

"We accept responsibility for our past mistakes. We have said we

are profoundly sorry for them, and we do so again." HSBC Chief

Executive Stuart Gulliver said.57

A 32-page brochure published on the HSBC website provides details

of 2012 results in terms of markets, strategies, and businesses,

as well as giving an outline of future plans.59

In July 2013, Alan Keir was appointed Chief Executive of HSBC

Bank plc after Brian Robertson resigned from his post. Keir's

duties include overseeing the firm's UK, European, Middle Eastern

and African divisions.60

Since 2013

In June 2014, an indirect wholly owned subsidiary HSBC Life (UK)

Limited agreed to sell its £4.2 billion UK pensions business

to Swiss Re.61

Operations

A map showing the countries of the world in which HSBC currently

has operations

HSBC has its world headquarters at 8 Canada Square in Canary

Wharf, London.62

HSBC has a significant presence in each of the world's major

financial markets, with the Americas, Asia Pacific and Europe

each representing around one third of its business. HSBC is the

largest bank in Hong Kong and prints most of Hong Kong's local

currency in its own name. As of 2 April 2008, according

to Forbes magazine, HSBC was the fourth-largest bank in the world

by assets (with $2,348.98 billion), the second largest in terms

of revenues (with $146.50 billion) and the largest in terms of

market value (with $180.81 billion). It was also the most

profitable bank in the world with $19.13 billion in net income in

2007 (compared to Citigroup's $3.62 billion and Bank of America's

$14.98 billion in the same period).63 In June 2006, The

Economist stated that since the end of 2005 HSBC has been rated

the largest banking group in the world by Tier 1 capital.64 In

June 2014 The Banker ranked HSBC first in Western Europe and 5th

in the world for Tier 1 capital.65 In February 2008, HSBC was

named the world's most valuable banking brand by The

Banker magazine.6667

HSBC is known for a conservative and risk-averse approach to

business – a company tradition going back to the 19th

century.68 This reputation has been brought into question in the

21st century.

In its technical management, however, HSBC has recently suffered

a series of headline-making incidents in which some customer data

were allegedly leaked or simply went missing. Although the

consequences turned out to be small, the embarrassing effect on

the group's image did not go unnoticed.69

HSBC is currently audited by one of the Big Four auditors, KPMG.

The HSBC and KPMG headquarters are adjacent to one another, with

KPMG occupying 15 Canada Square.70HSBC Main Building, Hong

Kong is also adjacent to KPMG office located in Prince's

Building. A decision on 2 August 2013 made public

that PricewaterhouseCoopers will take on the HSBC audit in

2015.71

In the six months to 30 June 2014, the bank reported a £7.33

billion ($12.34 billion) profit before tax, down from $14.07

billion for the comparable period in 2013.72

Principal subsidiaries

The HSBC building in Manila, Philippines

Asia Pacific

HSBC Bank Armenia

HSBC Bank Australia Limited

The Hongkong and Shanghai Banking Corporation Ltd

Hang Seng Bank Ltd

HSBC Bank (China) Company Ltd

HSBC Bank Malaysia Berhad

HSBC Bank Philippines Ltd

HSBC Bank India

HSBC Bank Indonesia

HSBC Bank Bangladesh

HSBC Sri Lanka

HSBC Bank Pakistan

HSBC Bank Vietnam

Europe

HSBC France

HSBC Trinkaus und Burkhardt AG

HSBC Bank International – the offshore banking arm of the HSBC

Group, focusing on providing offshore solutions and cross

border services to expatriates and migrants.73 It provides a

full range of multi-currency personal banking services to a

range of customer segments, including a full internet banking

and telephone banking service. Sometimes referred to as "HSBC

Offshore", the business also offers independent financial

planning, and has representative offices all over the world,

often working alongside local HSBC operations in those

regions. HSBC Bank International originated from the business

started by Midland Bank and is based in the Channel

Islands with further operations on theIsle of Man. Its

operations in the Channel Islands are centred around its

headquarters on the seafront in St Helier, Jersey.

HSBC Bank Malta plc

HSBC Bank A.Ş.

HSBC Private Bank (UK) Ltd

HSBC Bank plc

Americas

The headquarters of HSBC Brazil inCuritiba

HSBC Bank USA Inc

HSBC Finance Corporation

HSBC Bank Canada

Middle East and North Africa

HSBC Bank Middle East Ltd

HSBC Bank Egypt SAE

The Saudi British Bank

Principal business groups and divisions

HSBC organises its customer-facing activities within four

business groups: Commercial Banking; Global Banking and Markets

(investment banking); Personal Financial Services (retail

banking and consumer finance); and Global Private Banking.9

Commercial Banking

HSBC provides financial services to small, medium-sized and

middle-market enterprises. The group has more than 3 million of

such customers, including sole proprietors, partnerships, clubs

and associations, incorporated businesses and publicly quoted

companies.

Global Banking & Markets

Global Banking and Markets is the investment banking arm of HSBC.

It provides investment banking and financing solutions for

corporate and institutional clients, including corporate banking,

investment banking, capital markets, trade services, payments and

cash management, and leveraged acquisition finance. It provides

services in equities, cr and rates, foreign exchange, money

markets and securities services, in addition to asset management

services.

Global Banking and Markets has offices in more than 60 countries

and territories worldwide, and describes itself as "emerging

markets-led and financing-focused".74

Global Banking and Markets is currently being led by former

fixed-income trader Samir Assaf, who was promoted from global

head of markets on 10 December 2010.75

Global Private Banking

Main article: HSBC Private Bank

The main London office of HSBC Private Bank in St James's

HSBC Private Bank is the marketing name for the private banking

business conducted by the principal private banking subsidiaries

of the HSBC Group worldwide. HSBC Private Bank, together with the

private banking activities of HSBC Trinkaus, known collectively

as Group Private Banking, provides services to high net worth

individuals and their families through 93 locations in some 42

countries and territories in Europe, the Asia-Pacific region, the

Americas, the Middle East and Africa. As of December 2007,

profits before tax were US$1,511 million and combined client

assets under management were US$494 billion.

In September 2008, HSBC announced that it would combine its two

Swiss private banks under one brand name in 2009, with HSBC

Guyerzeller and HSBC Private Bank to be merged into one legal

entity, under the newly appointed CEO of HSBC Private Bank,

Alexandre Zeller.76

Retail Banking and Wealth Management

HSBC provides more than 54 million77 customers worldwide with a

full range of personal financial services,

including current and savings accounts, mortgage loans, car

financing, insurance, cr cards, loans, pensions and investments.

Retail Banking and Wealth Management (also known as RBWM) was

previously referred to as Personal Financial Services (PFS). This

rename was announced during HSBC's 2011 Investor Day.78

Group Service Centres

As a cost-saving measure HSBC is offshoring processing work to

lower cost economies in order to reduce the cost of providing

services in developed countries. These locations take on work

such as data processing and customer service, but also

internal software

engineering at Pune (India), Bangalore (India), Hyderabad (India)

, Vishakhapatnam (India),Calcutta (India), Guangzhou (China), Cur

itiba (Brazil) and Kuala Lumpur (Malaysia).

The HSBC Global Technology Centre in Pune, India

Chief Operating Officer Alan Jebson said in March 2005 that he

would be very surprised if fewer than 25,000 people were working

in the centres over the next three years: "I don't have a precise

target but I would be surprised if we had less than 15 (global

service centres) in three years' time." He went on to say that

each centre cost the bank from $20m to $30m to set up, but that

for every job moved the bank saves about $20,000 (£10,400).80

Trades unions, particularly in the UK and US, blame these centres

for job losses in developed countries, and also for the effective

imposition of wage caps on their members.80

Currently, HSBC operates centres out of nine countries,

including; United Kingdom (Leeds, Hamilton, Edinburgh, Swansea,

Manchester, Coventry & Leicester), Brazil (Curitiba), the Czech

Republic (Ostrava), India

(Calcutta, Hyderabad, Bangalore, Visakhapatnam, Bombay,Gurgaon an

d Pune), China (Shanghai, Guangzhou and Shenzhen), Malaysia

(Kuala Lumpur), Poland (Krakow), Sri Lanka (Rajagiriya) and the

Philippines (Manila). The Malta trial for a UK high value call

centre has resulted in a growing operation that country. An

option under consideration is reported to be a processing centre

in Vietnam to access the French skills of the population and

therefore cut costs in the bank's French operations.

Global product lines

HSBC Direct

HSBC Direct is a telephone/online direct banking operation which

attracts customers through mortgages, accounts and savings. It

was first launched in the USA81 in November 2005 and is based on

HSBC's 'First Direct' subsidiary in Britain which was launched in

the 1980s. The service is now also available in

Canada,82 Taiwan,83 South Korea,84 France and India.85 Poland is

launching business direct in September 2009. In the US, HSBC

Direct is now part of HSBC Advance86

HSBCnet

HSBCnet87 is a global service that caters to local business needs

by offering specialised functionality for different regions

worldwide.

The system provides access to transaction banking functionality –

ranging from payments and cash management to trade services

features – as well as to research and analytical content from

HSBC. It also includes foreign exchange and money markets trading

functionality.

The system is used widely by HSBC's high-end corporate and

institutional clients served variously by the bank's global

banking and markets, commercial banking and global transaction

banking divisions.

HSBCnet is also the brand under which HSBC markets its global e-

commerce proposition to its corporate and institutional clients.

HSBC Advance

HSBC Advance88 is the group's product aimed at working

professionals. The exact benefits and qualifications vary

depending on country, but typically require a transfer of Salary

of USD 1,500 or more every month or Maintain USD 25,000 of

deposits in a Savings/Current Account or investments. Advantages

may vary depending on country, such as day-to-day banking

services including but not limited to a Platinum Cr Card, Advance

ATM Card, Current Account and Savings Account. Protection plans

and Financial Planning Services. A HSBC Advance customer enables

the customer to open accounts in another country and transfer

their cr history.

HSBC Premier

HSBC Premier89 is the group's premium financial services product,

comparable to the Centurion service of American Express. It has

its own Elite Card entitled HSBC Premier World Card. The exact

benefits and qualification criteria vary depending on country.

Customers have a dedicated Premier Relationship Manager, global

24-hour access to call centres, free banking services and

preferential rates. A HSBC Premier customer receives the HSBC

Premier services in all countries that offer HSBC Premier,

without having to meet that country's qualifying criteria

("Premier in One, Premier in All"90).

Money laundering

Money laundering has been an issue in Argentina, India, the

United Kingdom and the United States.

Following search warrants and raids beginning in January 2013, in

mid-March 2013 Argentina's main taxing authority accused HSBC of

using fake receipts and dummy accounts to facilitate money

laundering and tax evasion.919293

On 19 July 2012, India assured to get to the bottom of alleged

violation of safety compliance, in which Indian employees are

presumed to be involved.94 On 9 November 2012, Indian activist

and politician Arvind Kejriwal claimed he had details of 700

Indian bank accounts hiding black money with a total value of  60

billion (US$980 million) with HSBC in Geneva.95 In June 2013, a

media outlet in India did an undercover expose where HSBC

officers were caught on camera agreeing to launder "black money."

HSBC placed these employees on leave pending their own internal

investigation.96

In early February 2013, appearing before UK's Parliamentary

Banking Standards Commission, CEO Stuart Gulliver acknowledged

that the structure of the bank had been "not fit for purpose." He

also stated, "Matters that should have been shared and escalated

were not shared and escalated."97 HSBC has also been accused of

laundering money for terrorist groups.9798

In both 2003 and 2010, U.S. regulators ordered HSBC to strengthen

its anti-money laundering practices.99 In October 2010, the

United States OCC issued a Cease and Desist Order requiring HSBC

to strengthen multiple aspects of its Anti-Money Laundering (AML)

program. The identified problems included a once massive backlog

of over 17,000 alerts identifying suspicious activity, failure to

file timely suspicious activity reports with U.S. law

enforcement, failure to conduct any due diligence to assess risks

to HSBC affiliates before opening correspondent accounts for

them, a three-year failure by HBUS from mid-2006 to mid-2009 to

conduct any AML of $15 billion in bulk cash transactions from

those same HSBC affiliates, failure to monitor $60 trillion in

annual wire transfers by customers in countries rated lower risk

by HBUS, and inadequate and unqualified AML staffing, resources,

and leadership. It was noted that HSBC fully cooperated with the

Senate investigation.100

In November 2012 it was reported that HSBC had set up offshore

accounts in Jersey for suspected drug-dealers and other

criminals, and that HM Revenue and Customs had launched an

investigation following a whistleblower leaking details of £700

million allegedly held in HSBC accounts in the Crown

dependency .101

In December 2012, Assistant U.S. Attorney General Lanny Breuer

suggested that the U.S. government might resist criminal

prosecution of HSBC which could lead to the loss of the bank's

U.S. charter. He stated, "Our goal here is not to bring HSBC

down, it's not to cause a systemic effect on the economy, it's

not for people to lose thousands of jobs."99

In December 2012, HSBC was penalized $1.9 billion (US), the

largest fine under the Bank Secrecy Act, for violating four U.S.

laws designed to protect the U.S. financial system.102HSBC had

allegedly laundered at least $881 million in drugs proceeds

through the U.S. financial system for international cartels, as

well as processing an additional $660 million for banks in US

sanctioned countries. According to the report, "The U.S. bank

subsidiary also failed to monitor more than $670 billion in wire

transfers and more than $9.4 billion in purchases of physical

dollars from its Mexico unit."102 As part of the agreement

deferring its prosecution, HSBC acknowledged that for years it

had ignored warning signs that drug cartels in Mexico were using

its branches to launder millions of dollars, and also

acknowledged that HSBC's international staff had stripped

identifying information on transactions made through the United

States from countries facing economic sanctions such as Iran and

Sudan.99

A February 2013 article in Rolling Stone magazine, which was

critical of what they regarded as the timid response by the U.S.

Justice Department, stated "Yes, they issued a fine – $1.9

billion, or about five weeks' profit – but they didn't extract so

much as one dollar or one day in jail from any individual,

despite a decade of stupefying abuses" and further stated, "In

this case, the bank literally got away with murder – well, aiding

and abetting it, anyway."103 A December 2012 CNNMoney article

compared the 1.9 billion dollar fine to HSBC's profit "last year"

(2011) of 16.8 billion.99

Other controversies

In the report titled "In the Future There Will Be No Forests

Left" produced by Global Witness, the bank is also being accused

of supporting the seven largest Malaysian timber conglomerates

which are responsible for rapid deforestation in the Malaysian

state of Sarawak without any FSC certifications.104 However, the

bank declined to divulge its clients on this issue, citing the

confidentiality of its clients; but the bank maintains that the

accusations that its clients violate forestland and forest-

products policy is not accurate.105

HSBC also held billions of dollars of assets for the Libyan

Investment Authority, which was controlled by Colonel Muammar

Gaddafi; after Gaddafi's overthrow and assassination, the bank

refused to reveal information about the funds, citing customer

confidentiality.106107108

In 2014 HSBC refused to allow customers to withdraw large cash

amounts without a third-party letter confirming what the money

would be used for.109 Douglas Carswell, the Conservative MP for

Clacton, was alarmed by the HSBC policy: "All these regulations

which have been imposed on banks allow enormous interpretation.

It basically infantilises the customer. In a sense your money

becomes pocket money and the bank becomes your parent."

In 2014 HSBC closed North London Central Mosque's account and

some muslim clients and group's

accounts. 110 111 112 113 114 115 116 Several sources report that HSBC

closed them because they donated their money to Palestine during

the massacring. 117 118 119

Logo

The group announced in November 1999 that the HSBC brand and the

hexagon symbol would be adopted as the unified brand in all the

markets where HSBC operates, with the aim of enhancing

recognition of the group and its values by customers,

shareholders and staff throughout the world.

The hexagon symbol was originally adopted by the Hongkong and

Shanghai Banking Corporation as its logo in 1983. It was

developed from the bank's house flag, a white rectangle divided

diagonally to produce a red hourglass shape. Like many other Hong

Kong company flags that originated in the 19th century, and

because of its founder's nationality, the design was based on

the cross of Saint Andrew. The logo was designed by Austrian

graphic artist Henry Steiner.120

Sponsorships

The 2004 Jaguar Racing Formula One car, being driven by Mark

Webber

Having sponsored the Jaguar Racing Formula One team since the

days of Stewart Grand Prix, HSBC ended its relationship with the

sport when Red Bull purchased Jaguar Racing from Ford. HSBC has

now switched its focus to golf, taking title sponsorship of

events such as theHSBC World Match Play Championship, HSBC

Women's World Match Play Championship (now defunct), HSBC

Champions and HSBC Women's Champions.

In football HSBC sponsors French club AS Monaco and Mexican

club C.F. Pachuca, and in rugby league, HSBC sponsors Telford

Raiders in the Rugby League Conference. In Australia, HSBC

sponsors the New South Wales Waratahs rugby team in Super

Rugby rugby unioncompetition, as well as the Hawthorn Football

Club in the Australian Football League.

HSBC's other sponsorships are mainly in the area of education,

health and the environment. In November 2006, HSBC announced a

$5 million partnership with SOS Children as part of Future

First.121

HSBC sponsors the Great Canadian Geography Challenge, which has

had around 2 million participants in the past 12 years. Since

2001, HSBC has sponsored the Celebration of Light, an annual

musical fireworks competition in Vancouver, British Columbia,

Canada. In 2007 HSBC announced it would be a sponsor of

the National Hockey League's Vancouver Canucks and Calgary

Flames. HSBC has also sponsored a professional gaming team that

was disbanded late 2007. HSBC is also committed to local

sponsorships, the Mandarins Cricket Club being one example.

HSBC sponsored the 2009 British and Irish Lions tour to South

Africa.122

HSBC is the official banking partner of the Wimbledon Tennis

Championships, providing banking facilities on site and renaming

the Road to Wimbledon junior event, as the HSBC Road to Wimbledon

National 14 and Under Challenge.123

HSBC was named the 'Official Banking Partner' of the Open

Championship, in a five-year deal announced in 2010.124

In October 2010, the International Rugby Board announced that

they had concluded a 5-year deal with HSBC which granted them

status as the first ever title sponsor of the IRB Sevens World

Series. Through the accord, HSBC is paying more than $100 million

for the title naming rights to all the tournaments in the IRB

Series, beginning with the Dubai Sevens on 3 December 2010, and

ending in the spring of 2015. HSBC opted to sub-license the

naming rights to all but one of the individual tournaments, while

retaining its name sponsorship of the overall series as well as

co-sponsorship (with Cathay Pacific) of the world's most famous

7-a-side rugby tournament, the Hong Kong Sevens.125

InsuranceMain article: Insurance

Insurance brokerage - Insurance brokers shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently a number of websites have been created to give consumers basic price comparisons for servicessuch as insurance, causing controversy within the industry.[5]

Insurance underwriting - Personal lines insurance underwriters actually underwrite insurance for individuals, a service still offered primarily through agents, insurance brokers, and stock brokers. Underwriters mayalso offer similar commercial lines of coverage for businesses. Activities include insurance and annuities, life insurance, retirement insurance, health insurance, and property & casualty insurance.

F&I - Finance & Insurance, a service still offered primarily at asset dealerships. The F&I manager encompasses the financing and insuring of the asset which is sold by the dealer. F&I is often called "the second gross" in dealerships who have adopted the model

Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.

Other financial services[edit]

Bank cards - include both credit cards and debit cards. Bank Of America is the largest issuer of bank cards.[citation needed]

Credit card machine services and networks - Companies which provide credit card machine and payment networks call themselves "merchant card providers".

Intermediation or advisory services - These services involve stock brokers (private client services) and discount brokers. Stock brokers assist investors in buying or selling shares. Primarily internet-based companies are often referred to as discount brokerages, although many now have branch offices to assist clients. These brokerages primarily target individual investors. Full service and private client firms primarily assist and execute trades for clients with large amounts of

capital to invest, such as large companies, wealthy individuals, and investment management funds.

Private equity - Private equity funds are typically closed-endfunds, which usually take controlling equity stakes in businesses that are either private, or taken private once acquired. Private equity funds often use leveraged buyouts (LBOs) to acquire the firms in which they invest. The most successful private equity funds can generate returns significantly higher than provided by the equity markets

Venture capital is a type of private equity capital typically provided by professional, outside investors to new, high-growth-potential companies in the interest of taking the company to an IPO or trade sale of the business.

Angel investment - An angel investor or angel (known as a business angel or informal investor in Europe), is an affluentindividual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share resources and pool their investment capital.

Conglomerates - A financial services company such as a universal bank that is active in more than one sector of thefinancial services market e.g. life insurance, general insurance, health insurance, asset management, retail banking,wholesale banking, investment banking, etc. A key rationale for the existence of such businesses is the existence of diversification benefits that are present when different typesof businesses are aggregated i.e. bad things don't always happen at the same time. As a consequence, economic capital for a conglomerate is usually substantially less than economic capital is for the sum of its parts.

Financial market utilities - Organisations that are part of the infrastructure of financial services, such as stock exchanges, clearing houses, derivative and commodity exchangesand payment systems such as real-time grosssettlement systems or interbank networks.

Debt resolution is a consumer service that assists individualsthat have too much debt to pay off as requested, but do not

want to file bankruptcy and wish to pay off their debts owed. This debt can be accrued in various ways including but not limited to personal loans, credit cards or in some cases merchant accounts.

Adoption of banking technology

The IT[clarification needed] revolution has had a great impact on the Indian banking system. The use of computers has led to the introduction of online banking in India. The use of computers in the banking sector in India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. Indian banks were finding it difficult to compete with the international banks in terms of customer service, without the use of information technology.The RBI set up a number of committees to define and co-ordinate banking technology. These have included:

In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984)[13] whose chairman was Dr. C Rangarajan,Deputy Governor, Reserve Bank of India. The major recommendations of this committee were introducing MICR technology in all the banks in the metropolises in India.[14] This provided for the use of standardized cheque forms and encoders.

In 1988, the RBI set up the Committee on Computerisation in Banks (1988)[15] headed by Dr. C Rangarajan. It emphasized that settlement operation must be computerized in theclearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further stated that there should be National Clearing ofinter-city cheques atKolkata, Mumbai, Delhi, Chennai and MICR should be made operational. It also focused on computerisationof branches and increasing connectivity among branches throughcomputers. It also suggested modalities for implementing on-line banking. The committee submitted its reports in 1989 and

computerisation began from 1993 with the settlement between IBA and bank employees' associations.[16]

In 1994, the Committee on Technology Issues relating to Payment systems, Cheque Clearing and Securities Settlement in the Banking Industry (1994)[17] was set up under Chairman W S Saraf. It emphasized Electronic Funds Transfer (EFT) system, with the BANKNET communications networkas its carrier. It also said that MICR clearing should be set up in all branches of all those banks with more than 100 branches.

In 1995, the Committee for proposing Legislation on ElectronicFunds Transfer and other Electronic Payments (1995)[18] again emphasized EFT system.[16]

The total number of automated teller machines (ATMs) installed inIndia by various banks as of end June 2012 is 99,218.[19] The new private sector banks in India have the most ATMs, followed by off-site ATMs belonging to SBI and its subsidiaries and then by nationalised banks and foreign banks, while on-site is highest for the nationalised banks of India.[16]

Expansion of banking infrastructureAs per the census of 2011, 58.7% of households are availing banking services in the country. There are 102,343 branches of Scheduled Commercial Banks (SCBs) in the country, out of which 37,953 (37%) bank branches are in the rural areas and 27,219 (26%) in semi-urban areas, constituting 63% of the total numbers of branches in semi-urban and rural areas of the country. However, a significant proportion of the households, especially in rural areas, are still outside the formal fold of the banking system. To extend the reach of banking to those outside the formal banking system, Government and Reserve Bank of India (RBI)are taking various initiatives from time to time some of which are enumerated below:

Opening of bank branches: Government had issued detailed strategy and guidelines on Financial Inclusion in October 2011, advising banks to open branches in all habitations of 5,000 or more population in under-banked districts and 10,000 or more population in other districts. Out of 3,925 such identified villages/habitations, branches have been opened in 3,402 villages/habitations (including 2,121 Ultra Small Branches) by end of April, 2013.

Each household to have at least one bank account: Banks have been advised to ensure service area bank in rural areas and banks assigned the responsibility in specific wards in urban area to ensure that every household has at least one bank account.

Business Correspondent model: With the objective of ensuring greater financial inclusion and increasing the outreach of thebanking sector, banks were permitted by RBI in 2006 to use theservices of intermediaries in providing financial and banking services through the use of Business Facilitators (BFs) and Business Correspondents (BCs). Business correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. BCs and the BC agents (BCAs) represent the bank concerned and enable a bank to expand its outreach and offer limited range of banking services at low cost, particularly where setting up a brick and mortar branch is not viable. BCs as agents of the banks, thus, are an integral part of the business strategy for achieving greater financial inclusion. Banks had been permitted to engage individuals/entities as BC like retired bank employees, retired teachers, retired government employees, ex-servicemen, individual owners of kirana/medical/fair price shops, individual Public Call Office(PCO) operators, agents of Small Savings Schemes of Governmentof India, insurance companies, etc. Further, since September 2010, RBI had permitted banks to engage "for profit" companiesregistered under the Indian Companies Act, 1956, excluding Non-Banking Financial Companies (NBFCs), as BCs in addition to individuals/entities permitted earlier. According to the data maintained by RBI, as in December, 2012, there

were over 152,000 BCs deployed by Banks. During 2012-13, over 183.8 million transactions valued at  165 billion (US$2.7 billion) had been undertaken by BCs till December 2012.

Swabhimaan Campaign: Under "Swabhimaan" - the Financial Inclusion Campaign launched in February 2011, banks had provided banking facilities by March, 2012 to over 74,000 habitations having population in excess of 2000 using various models and technologies including branchless banking through Business Correspondents Agents (BCAs). Further, in terms of Finance Minister's Budget Speech 2012-13, the "Swabhimaan" campaign has been extended to habitations with population of more than 1,000 in North Eastern and Hilly States and to habitations which have crossed population of 1,600 as per census 2001. About 40,000 such habitations have been identified to be covered under the extended "Swabhimaan" campaign.

Setting up of ultra-small branches (USBs): Considering the need for close supervision and mentoring of the Business Correspondent Agents (BCAs) by the respective banks and to ensure that a range of banking services are available to the residents of such villages, Ultra Small Branches (USBs) are being set up in all villages covered through BCAs under Financial Inclusion. A USB would comprise a small area of 100 sq ft (9.3 m2) - 200 sq ft (19 m2) where the officer designated by the bank would be available with a laptop on pre-determined days. While the cash services would be offered by the BCAs, the bank officer would offer other services, undertake field verification and follow up on the banking transactions. The periodicity and duration of visits can be progressively enhanced depending upon business potential in the area. A total of over 50,000 USBs have been set up in the country by March 2013.

Banking facilities in Unbanked Blocks: All the 129 unbanked blocks (91 in North East States and 38 in other States) identified in the country in July 2009, had been provided withbanking facilities by March 2012, either through Brick Mortar Branch or Business Correspondents or Mobile van. As a next

step it has been advised to cover all those blocks with BCA and Ultra Small Branch which have so far been covered by mobile van only.

USSD  Based Mobile Banking: National Payments Corporation of India (NPCI) worked upon a "Common USSD Platform" for all banks and telcos who wish to offer the facility of Mobile Banking using Unstructured Supplementary Service Data (USSD) based Mobile Banking. The Department helped NPCI to get a common USSD Code *99# for all telcos. More than 20 banks have joined the National Uniform USSD Platform (NUUP) of NPCI and the product has been launched by NPCI with BSNL and MTNL. Other telcos are likely to join in the near future. USSD basedMobile Banking offers basic Banking facilities like Money Transfer, Bill Payments, Balance Enquiries, Merchant Payments etc. on a simple GSM based Mobile phone, without the need to download application on a phone as required at present in the IMPS based Mobile Banking.

Steps taken by Reserve Bank of India (RBI) to strengthen the banking infrastructure

RBI has permitted domestic Scheduled Commercial Banks (excluding RRBs) to open branches in tier 2 to tier 6 cities (with population up to 99,999 as per census 2001) without the need to take permission from RBI in each case, subject to reporting.

RBI has also permitted SCBs (excluding RRBs) to open branches in rural, semi-urban and urban centres in North Eastern Statesand Sikkim without having the need to take permission from RBIin each case, subject to reporting.

Regional Rural Banks  (RRBs) are also allowed to open branches in Tier 2 to Tier 6 centres (with population up to 99,999 as per Census 2001) without the need to take permission from RBI in each case, subject to reporting, provided they fulfill the following conditions, as per the latest inspection report: CRAR  of at least 9%; Net NPA less than 5%; No default in CRR / SLR for the last year; Net profit in the last financial year;

CBS  compliant. Domestic SCBs have been advised that while preparing their

Annual Branch Expansion Plan (ABEP), they should allocate at least 25% of the total number of branches proposed to be opened during the year in unbanked Tier 5 and Tier 6 centres i.e. (population up to 9,999) centres which do not have a brick and mortar structure of any SCB for customer based banking transactions.

RRBs have also been advised to allocate at least 25% of the total number of branches proposed to be opened during a year in unbanked rural (Tier 5 and Tier 6) Centres).

New private sector banks are required to ensure that at least 25% of their total branches are in semi-urban and rural centres on an ongoing basis.