Indian banks have a long way to go before matching global peers

Mumbai, Jan 31 | Updated: Feb 1 2006, 05:30am hrs
With the country increasingly getting integrated with the global financial world, the Indian banking sector has a long way to go to catch up with their global peers.

This was the mood of the speakers from the Indian banking industry in the seminar organised by Indian Merchants Chamber (IMC) and Indian Banking Association (IBA) on Tuesday.

Consolidation seems a key area that Indian banks should focus on. Speaking on the occasion V Leeladhar, deputy governor, Reserve Bank of India (RBI), points out that about eight best global Indian banks are ought to emerge as a result of the consolidation process in the banking industry, which has just commenced. At present, there are only 2-3 global banks in the country.

Others have shared that size is one of the key challenges too. Though there are certain entities like ICICI Bank taking advantage of the Indian Diaspora and spreading their presence in foreign geographies. However, natural consolidation is not taking place. For certain banks there is a tendency to survive, which cannot continue for long. It creates an illusion that they are successful at home. Having global capacity is a prerequisite for any Indian bank to succeed in foreign soil, opined Leo Puri, director, Mckinsey & Co.

According to Niall Booker, CEO, HSBC India, The other key challenge for banks today is getting and retaining key human resources. India is becoming a hub for global companies, seeking to tap the enormous talent pool here. Banks have to evolve tools to motivate their staff in ensuring their success.

Among other challenges, as pointed out by Bhasker Ghose, MD, IndusInd Bank, remains in the area of fine tuning the retail loan sector in order to maintain a healthy balance sheet.

The largest number of frauds in the retail loan segment is happening in the housing sector.

Speaking on Indian Infrastructure -Growth and Financing Opportunities in another seminar, Rajiv Lall, MD and CEO, Infrastructure Development Finance commented that the Indian banks are not quipped enough to take the risk of infrastructure finance but competitive pressures forcing them to behave in a dangerous manner.