IBA Vision 2010 Dwells On 3 Ts

Mumbai, Nov 6: | Updated: Nov 7 2003, 05:30am hrs
Call it the three Ts of Indian banking: technology, transparency and transformation. The IBA (Indian Banks Association) committee on vision statement has dwelt largely on these issues in its draft version of the statement, which takes into account how the Indian banking industry needs to evolve over the next five years. The committee recently submitted its report and this has been placed before the IBA managing committee.

IBA is likely to approve the statement in its next managing committee meeting on November 20, 2003. The statement will be called Vision 2010 Banking Industry. We will also place this on our website, IBA chief executive and secretary HN Sinor told FE.

IBA has also asked all its member banks to come out with suggestions on the vision statement, which will help set the agenda for the road ahead for the banking industry.

Technology, transparency and transformation were the major agenda before the committee, Mr Sinor said, adding the vision is to make the domestic banking industry a globally competitive one.

Reflecting Mr Sinors view, chairman of the committee and Indian Overseas Bank chairman and managing director SC Gupta said: We have progressed quite dramatically over the last few years and now the quest is to become globally competitive.

Said Mr Gupta: Going forward, mergers and acquisitions (M&A) will change the banking sphere. We tried to address how technology upgradation in banks changes the banking landscape and may facilitate the M&A activities in the coming years.

The new Capital Accord of Basel 2 has figured prominently in the vision statement. The Basel norms will be in place by 2006 and this will increase the capital requirements. Keeping the increasing capital needs and the declining profitability in mind, the committee examined the evolving structure of the banking industry.

HRD is another very important area and we have discussed what sort of skill set would be essential for bankers to do well in the future. Risk management, risk-based supervision and derivatives are the areas we have to focus on more and bankers need to be trained in these areas, Mr Gupta said. He feels it is not always necessary to hire management graduates but important to train the workforce adequately.

On transparency, Mr Gupta underscored the need to move towards internationally practiced accounting standards. We have been following RBI (Reserve Bank of India) guidelines diligently. Now its time to move forward. Corporate governance has always been a major issue, he said.

The vision statement, however, does not set targets for individual banks as well as for banking industry as a whole.

The plan for coming out with a vision statement was first mooted early in the year to take a closer look on how to cope with competition and what should be done to help create a strong financial environment, especially in the light of the imminent WTO regime, greater liberalisation and free flow of foreign funds into the domestic banking system.