Bankers agree, current scenario offers room for introspection

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Mumbai, Aug 20: has given a number of advantages too,’’ he said.

Naina Lal Kidwai, group general manager & country head, India, HSBC India, said: “While in the short term the sentiment looks very cautious, good projects will happen. In 2009-10, foreign banks will come into India and make the scenario very competitive.”

At the outset, the banking sector is all set for a rollercoaster ride. High inflation and interest rates are putting pressure on the overall banking system. The consumer portfolio looks much stressed today. The slowdown in the sector is not positive news for the industry, Kidwai added. “In the near term, we are seeing that credit into some sectors is slowing in a big way. We might even see an industrial slowdown,” she said.

Speaking at the discussion, ABN Amro Bank country executive for India Meera Sanyal said: “Today, the biggest challenge and constraint for us is rural delivery.” Talking about the huge corporate investments in the pipeline and the need for resources, Sanyal said, “Where are the long-term sources of funding? There is an asset-liability mismatch. We need wider reforms to allow more players to deepen the market.”

Rana Kapoor, founder & CEO of Yes Bank, said banks have strategies for three scenarios: short-term, medium-term and long-term. “Though the short-term strategy has to manage the tougher issues, in the longer term, the India growth story remains very attractive.”

Rashesh Shah, chairman, Edelweiss Group, said the market had some areas of concern for banks, which included the ability to raise capital and higher inflation. However, there were opportunities as well, going forward, in the medium-to-long term, which would be viewed carefully by investors. The fiscal deficit was another challenge, he said.