Our financial sector is under-capitalised, says Citibank chief

Bangalore, Jan 19 | Updated: Jan 20 2007, 05:30am hrs
The financial sector in India is hugely under-capitalised. As a result, people have to look at external (foreign) markets to raise resources where they have to comply with stringent regulatory issues, Sanjay Nayar, chief executive officer, India and global corporate and investment, Citibank, said.

He was speaking at the CII-Partnership Summit in Bangalore on Friday.

There is a resource crunch in terms of quantity and time-frame, which poses barriers to ambitious infrastructure projects, he added.

While lauding the cultural adaptability and hard working skills of Indian managers, Nayar expressed his concerns about infrastructure bottlenecks and under-penetration of the Indian banking system that could affect the growth rate. Increasing branch network, introduction of technology, raising capital, sourcing talent, increasing staff compensations would improve the banking system in the country, Nayar said.

Also speaking at the summit, Sreedhar Menon, chairman, Viteos Capital Market Services Limited, USA, said the government of India should resort to securitisation and partial liberalisation of assets in a bid to make capital resources available for funding the growth of Indian economy.

Only very few companies in India have the capacity to raise resources. Resources are available, but the government is sitting on the resources. Where is the market to finance the acquisitions he asked.

The Indian banking system, which is considered to be better managed compared to China, does not reach out to masses.

He suggested that the government should sell some of its stakes in public sector banks. and other public companies to ensure availability of capital that can be used to fund developmental projects.