F Scott Fitzgerald once wrote to Ernest Hemingway about the ’rich being different from you and me.’ The latter’s matter-of-fact reply? ’Yes, they have more money.’

More money and these days, to manage it better, a private banking account. While foreign banks in India have for long been offering private banking and wealth management services along with private sector entities like ICICI Bank and HDFC Bank, two public sector banks have signalled their intent into getting into a segment that’s growing by about 40-50 per cent per annum.

Two months back, the country’s largest public sector bank, the State Bank of India SBI became the first in this genre to get into wealth management. Next in line is the Bank of Baroda BoB, which is firming up its plans for the same.

“There are a whole lot of people out there who would like their money to be better managed. We intend to offer them customised solutions through our set-up once we fine-tune our infrastructure,” says R E Almeida, GM, BoB.

Private banking or wealth management services are for those at the top of the social pile and the client profile includes film stars, sportspersons, doctors, lawyers and on occasion, agriculturalists from the hinterland.

These high net worth individuals look to a bank for investment advice—from bonds to mutual funds to equities—forex services, trade services, and insurance, with each customer being entitled to a personal relationship manager, on call 24/7/365. The banks earn their money from fees, commissions and the like.

The threshold varies from bank to bank. While HSBC and Deutsche Bank have a threshold of Rs 1 crore to Rs 1.5 crore, public sector entrants such as the SBI intend to peg it around Rs 30 lakh.

“The number of high net worth individuals is definitely on the rise,” says HSBC’s Vijay Venkatram, manager, financial planning services, India. “Ten years back, you wouldn’t have had people making the kind of money they’re doing now, like senior corporate executives, and professionals. Plus we also have promoters of companies who come to us.”

According to the Merill Lynch 038; Cap Gemini’s E038;Y World Wealth Report 2003, says Venkatram, there are about 50,000 families in India with net worth of over 1 million Rs 4.4 crore. While foreign banks like HSBC, ABN Amro and Deutsche Bank account for about 35-40 per cent of the market, the remainder of the pie lies uncatered to.

“While it has a small base, we see private banking as among the fastest growing segments along with credit cards and the like. As the market matures, we could maybe move from handling bonds and assets for our customers to investments in art,” says Gunit Chadha, managing director and chief country officer, India, Deutsche Bank, one-third of whose global revenues come from private banking. “Moreover,” says Nikhil Kapadia, Deutsche Bank’s director and head of private wealth management, India, “with dipping interest rates, people have realised that there’s no point in keeping their money idle. They would rather let someone they trust to put it to good use and make it grow in an increasingly complex world of derivative trading and innumerable mutual fund options etc. Which is where we come in.”

Chadha also feels that recent moves by the government like the softening of restrictions on investments abroad up to 25,000 will also help the segment grow. “Now, you could have more customers wanting to invest in off-shore funds,” says Chadha, “for which we have the requisite expertise.”

The established set feel that the entry of public sector banks will only help increase awareness and help the market grow further. “It’s like going to a departmental store or a supermarket. While we’re handling the top most layer, the state-run banks would be targeting the medium-rich and upper middle-class families,” says Kapadia, who feels that there are enough gaps in the segment waiting to be filled.

Which is what both SBI and BoB aim to do. “Obviously, we’ll be having a lower threshold than the foreign banks in line with our customer base, but we still haven’t decided on the exact figure,” says Almeida, who already has a pilot wealth management project up and running in Mumbai. SBI, which has McKinsey 038; Co advising it on its private banking operations, is also charting a similar course. The bank will concentrate in the beginning on portfolio management and filing of tax returns before deciding on offering the whole gamut of wealth management services.

“We’re also looking at private banking among the rural affluent,” says C Bhattacharya, managing director, SBI.

With inputs from Shefali Anand