Banking: The New Reality
From amongst banking sectors around the world, the Indian banking sector could easily be the most exciting. There is market for banking services is literally set to explode – both in terms of reach and also in terms of products offered. Supporting the strong economic growth and the drive to include the whole nation in its purview, the sector will keep creating opportunities for all the players.
However, at the same time, there are challenges that may intrude to stymie the pace of growth. The Basel II norms would require the need for better capital adequacy and better risk management norms. Are Indian banks geared to meet these requirements? After 2009, the Indian banking sector will, RBI willing, be thrown open to greater competition, with foreign banks having more leeway in the Indian market. The Indian banking sector has a number of regional players which operate in niches. There would be a need for such players to consolidate in order to get the best in these competitive times. What will it take for consolidation to take place in the sector?
The subprime crisis has debilitated the US economy to a large extent. And with strong growth comes the necessity to have quality assets as the banking sector assumes a large responsibility. What role would regulators have to manage the trade-off between growth and quality? How will regulation keep pace as new products and new players emerge in the financial horizon? Further, with the financial markets extremely volatile and bank bottomlines under pressure, how are they coping with the turbulence?
These are just some of the issues the fe Round Table Conference on Banking will raise for discussion.
