"We are definitely open to acquiring Indian banks, particularly public sector ones. The idea is to expand our reach across the country, which can be offered by the large branch network of state-run banks," HSBC Securities & Capital Markets (India) executive vice chairman, Euan Macdonald, said.

HSBC is an active player in retail banking including marketing of mutual funds and other financial products. According to Macdonald, the bank's product profile will require it to augment to size for reaching higher number of customers.

A couple of days back Standard Chartered Bank (Stanchart) announced its decision to acquire Australia and New Zealand Banking Group's (ANZ) operations in middle-East and south-Asia and Grindlays' associated private banking business for $1.34 billion.

What has however put a brake to the takeover ambitions of HSBC and other foreign banks in the country is the Reserve Bank of India (RBI) norms capping foreign holdings in domestic state-run and other banks to 20 per cent. Said Macdonald: "Ideally, the cap should be at 50 per cent. The issue is closely linked to the government divesting its stake in public sector banks," he said.

Foreign bankers see some ray of hope in the Centre's decision of lowering government stake in state-run banks to 33 per cent. They are, however, keeping their fingers crossed since picking up equity stake in excess of 20 per cent by foreign institutions and banks will need blessings of the government to enable the central bank to make the necessary changes in its norms.

Foreign holdings in several prominent banks including the State Bank of India (SBI) has already hit the 20 per cent ceiling.

Private sector Vysya Bank has a foreign bank - Bank Brussels Lambert - holding 20 per cent stake in the bank.

HSBC recently decided to acquire the French bank - Credit Commercial de France (CCF) - for 11 billion euros ($10.5 billion). In this regard, the bank will acquire the 24.3 per cent equity stake held by KBC Bancassurances/ Kredietbank, Luxembourg, the Taiyo Mutual Life Insurance Co, Lafarge and SMABTP. In addition, Swiss Life (15 per cent) and ING (19 per cent) have agreed to accept the acquirer bank's offer of 13 fully paid HSBC shares for each CCF share.

HSBC, in December'99 acquired the two US-based banks - Republican New York Corporation and Safra Republic Holdings SA. These twin acquisition will enable HSBC to double its private banking business to about 55,000 international private banking clients with more than $120 billion of funds under management. It has allowed HSBC to have the third largest branch network in New York State, with 455 branches servicing over two million customers.