FM chalks out 3C-formula for banks

Chennai, Nov 15 | Updated: Nov 16 2005, 05:30am hrs
Consolidation, Competition and Convergence (3Cs) are the future of the Indian banking industry. Banks and its employees should be prepared for consolidation in the industry, said finance minister P Chidambaram here on Tuesday.

He said there would be tough competition in the banking sector in the future. Size of a bank would matter a lot. It would determine the strength of the bank. So consolidation is a must. Customers would want all the banking services under one roof which means convergence of services.

Therefore, it is the responsibility of the top management and other employees to prepare themselves for the future scenario. Mr Chidambaram was here to inaugurate the 100th branch of Bharat Overseas Bank Ltd (BOBL).

In a monopoly situation it is very easy for banks to show profitability, but factors like quality of organisation, corporate governance, quality of audit and accountability and market discipline are very important and have to be improved, he added.

Scripting Growth
CompetitionFuture promises enough competition in the banking sector
ConsolidationSince size of a bank determines its strength, consolidation is a must
ConvergenceCustomers want all banking services under one roof, which highlights the importance of convergence of services
Earlier, speaking on the occasion, G Krishna Murthy, chairman and chief executive officer of BOBL said the bank is poised to show a significant growth in terms of branch network and balance sheet size. The bank is aiming at a balance sheet size of Rs 12,000 crore from the present level of Rs 4,500 crore. It is also planning to enhance its branch network to 200 by 2010 with a customer base of one million. We are planning to add 20 branches every year for the next four years. The bank will continue to focus on the small and medium enterprises (SME) and the retail sector, he said. The bank has net non-performing assets of 1.56% and capital adequacy ratio of 14.95%.