A banking conference organised by FICCI and the Indian Banks Association here on Thursday saw the country?s leading bankers express a pressing need to upgrade risk management practices of their respective banks, in order to avert major financial crises.
Speaking at the conference, titled ?Global Banking Paradigm Shift-Navigating Successfully in an Uncertain World?, OP Bhatt, chairman, State Bank of India (SBI) said that the $650 billion plus write-downs across global financial markets is expected to hit India as well. ?But only to some extent,? he noted, adding that the country is no way expected to post a growth rate below 7% in the years to come. ?Major economies of the world are slipping into recession, whereas the Indian economy is merely moderating,? said Bhatt.
He opined that in the prevailing scenario, public sector banks have fared better than their private sector counterparts in accumulating public savings. TS Narayansami, chairman and managing director, Bank of India, noted that the ?foresight of our policy-makers? was instrumental in averting a collapse of the Indian banking sector. He said that the recent turbulence in global financial markets finds no parallel in the past several decades.
?We have been witness to a series of cataclysmic upheavals in the financial world of late. The speed of events and intensity of the crisis has been profound. It has touched every one of us in some way or the other. Mercifully, thanks to the foresight of our policy makers, we seem, however, to have been spared the fury of the onslaught,? he said.
?Uncertainty is the order of the day, and to navigate in an uncertain world requires acumen, sagacity, putting lessons from past experiences into practice, and the ability to continuously recalibrate the way forward,? said Narayansami.
ICICI Bank?s joint managing director, Chanda D Kochhar said, ?In an uncertain environment, banks should avoid excessive risks.? She said that the global meltdown has drained liquidity from the Indian banking system; this has increased the requirement for domestic resources. The primary capital make too has taken a major hit. ?Fortunately, the safeguards adopted by us (Indian banks) while lending have helped in insulating ourselves from the global turmoil, up to a maximum extent,? Kochhar said.
?Also, the leverage levels in the Indian banking system are quite low and a substantial amount of funds are parked in government backed securities as a regulatory commitment,? she added.
Sanjay Nayar, CEO, Citibank India, harped on need for a robust bond market in order to mobilise savings in the country. ?Sole dependence on FDI/ FII funding will not help in the longer run,? he noted. Meera Sanyal, country executive, RBS India, said ?Over the next two years, the Indian baking sector will have to maintain high solvency, strong asset quality as well as remain capitalised.?