Foreign banks are a big threat on the sustainability of the public sector banks (PSBs) in the country; however, both can co-exist as the PSBs have a wide reach while the foreign and private banks have brought competitiveness and technology in the financial system, government bankers said on Friday at the concluding session of the three-day Ficci-IBA conference on ?Global Banking: Paradigm Shift?.
Participating in the round table discussion, SA Bhat, chairman and managing director, Indian Overseas Bank, said that the PSBs face stiff competition from foreign banks and it was time for government banks to opt for a centralised mechanism and cut costs on services. Government banks must take a cue from foreign banks on operating methodology, he said. Public sector banks in the country enjoy a 72% market share in the banking sector as of date, still they were under pressure of retaining the business share, he added.
Chairing the CEOs panel session on ?Sustaining growth momentum and living with competition? in Mumbai on Friday, State Bank of India (SBI) chairman OP Bhatt said that as two Indian banks are gearing up to join the club of top 50 banks of the world within next five years, it becomes important to know how the banks will be able to serve the unserved customers. ?As public sector banks, we have to facilitate those customers living in remote parts of the country and that may not be binding on foreign banks whose only mission is to increase profits. However, we will have to welcome them (foreign banks) that have not only brought new technology and capital to our country but also the competition on price and customer service,? said Bhatt.
Giving the example of the bank’s presence in India, Naina Lal Kidwai, CEO and country head-India, HSBC, said, ?I have observed that half of the customers that come to my bank were not being served before coming to our bank.? It is surprising knowing the fact that foreign banks have got just 7% share in the country’s banking sector, she said, adding that the culture of entepreneurship and being connected to the customers are the two important things today.
Sanjay Nayar, CEO-India & area head for Bangladesh, Nepal and Sri Lanka, Citi, said, “Lots of credits are required for the growing economy today and hence we will have to see how far we are able to reach unpenetrated markets.? The issue becomes significant at a time when more than 500 million customers are likely to join Indian banking sector within next five years, he added.
Pointing out the absence of consolidation in the Indian industry, David Wright, vice-chairman, Barclays Capital, said, “We’ll have to look for a major consolidation in the industry and other markets of the country.” Gunit Chadha, CEO & MD-India, Deutsche Bank Ag, said, ?There is a great opportunity for Indian banks to create entrepreneurship at a time when the market was growing at the rate of 40%.?
Rana Kapoor, Managing director & CEO, Yes Bank, said, ?Human capital and the skill set development are seriously needed in the banking sector.?