Indian Banking Vision 2010 - 03

Conclave on Indian Banking Vision 2010

BY SIESCOMS

PART 03

The next module was a panel discussion on Market Forces and Consolidation. Chaired by Mr. Ashvin Parekh, Partner and National Leader - Global Finance Service, Ernst & Young. Mr. Krishnamurthy Vijayan, Chief Executive Officer, J. P. Morgan AMC, India in this module mentioned about the impact of consolidation on the stock prices. The traders and Investors reaction along with the market reaction to the consolidation. He mentioned that the analyst in the industry like consolidation major reason for which being that the stocks would be bought into limelight if consolidation takes place and is likely to increase liquidity and more important is the opportunities that it would bring to both the speculators and the investors. The stocks potential would basically be analyzed on the bases of its Balance Sheets, Branch Networks, and Management post the consolidation.

To proceed, Mr. Venkatachalam, General Secretary, AIBEA, compared the Indian banks size to that of the foreign counterparts and also mentioned that in the future there would exist opportunities for some banks to carve out niche in the market and serve specific segments like the rural segment, in India this can be possible thanks to the huge diversity that the country provides.

Mr. Leo Puri, Managing Director, Warburg Pincus India Pvt. Ltd. spoke about the possibility of the public private cross consolidation can bring about certain implication which would be challenging to handle such as the public sector banks major goal would be to ensure social profit where as that of the private sector bank would be to earn commercial profit in such a situation, it may be difficult and confusing to decide on strategies and bring abount commonality of goals.

Also he brought about an interesting thought that in the past it was said that more the number of banks will be there, more the amount of competition would exist and hence more efficient the banks would become and now a reverse trend is seen where it is said that less the number of banks, more the consolidation and economies of scale and more efficiently the banks can operate.

The last but definitely not the least was the module on Changing Global Regulatory Standards. This module was handled by CA Ved Jain, President, Institute of Chartered Accountants of India and Mr. Prashant Saran, Chief General Manager-in-charge, Reserve Bank of India.

CA Ved Jain spoke about the various types of risk that need to be managed. The Credit Risk, Market Risk and Operations Risk are the risk that needs to be managed. Some of the regulatory framework for the same being BASEL II and Accounting Standards Rule 32. Also, in India, The International Financial Reporting Standard will come into play from 1st April, 2011. So, all banks will have to make sure by then, they comply to these standards for which they might have to look at consolidation as a option.

Mr. Prashant Saran spoke about the various tools for regulation like risk management, incentives, etc, on what the regulation entities want. He also threw light on rule based regulation in comparison to principle based regulations.

As good things come to an end, so this Conclave on Indian Banking Vision 2010 with the vote to thanks which was given by Mr. Ashvin Parekh, Ernst & Young. The wonderful event which made consolidation the way ahead for Indian Banks so much more clearer with a 360 degree view of all stakeholders and implication on each one of them. The event was possible thanks to the Indian Banks’ Association, Principal Sponsor IDBI Bank, Ernst & Young the Knowledge Partner for the event and S.I.E.S. College of Management Studies, the Academic Partner of the Conclave on Indian Banking Vision 2010.

PART 01

PART 02

Courtesy : Manish Punjabi

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