The bank says it is buying 14.71% of UTI Bank, a subsidiary of India's biggest mutual fund, and is angling to secure a further 25% as well.

HSBC is already shifting jobs to India to take advantage of much lower pay levels for skilled staff.

It also wants to expand its banking business to the middle classes there.

The 14.71% of UTI Bank that HSBC Asia-Pacific Holdings is buying from CDC Financial Services of Mauritius will cost 3.06bn rupees ($67m; �39m).

HSBC has an option to take a further 5.37% off CDC's hands, and it is hoping to buy 20% of UTI's shares from public shareholders at 90 rupees a share.

UTI has one of the biggest private-sector retail banking networks in India, in a market dominated by state-controlled groups, with 200 branches and more than 1,000 ATMs.

HSBC has 34 branches of its own in India, and 650,000 credit card customers.

Confidence in managers

India does not allow foreigners to own more than 49% of a bank.

And with nationalist sentiment growing about foreign takeovers, HSBC - the second-biggest bank in the world by asset size - was at pains to stress it was not seeking management control.

"We have confidence in the existing management," said Niall Booker, chief executive of HSBC India.

In the wake of a merger with US lender Household International last year, HSBC is more and more focusing on "sub-prime" lending, where careful credit scoring is used to lend to people who might otherwise be refused credit.

Earlier this year, it said it was focusing on Brazil and Mexico as well as India.