Conclave on Indian Banking Vision 2010
Ernst and Young, the Knowledge Partner of the event launched the report which it had prepared on the Indian Banking Sector in association with S.I.E.S. College of Management Studies and Indian Banks’ Association called “Consolidation: way forward.
Mr. Ashvin Parekh, Partner and National Leader-Global Financial Service, Ernst & Young spoke about the report in brief, mentioning the need of consolidation, the drivers, trends and the areas that would require attention. In India, we have a number of Commercial banks both in the private and public sector along with a number of co-operative banks, UCB’s Regional Rural Banks and Foreign Banks. Public banks could have issues related to NPA or Capital requirements, the Private bank may not have deep pockets of the promoters and consolidation would through be needed. The Drivers towards Consolidation being the need for size, the need for minimum net worth and the BASEL II requirements.
Internationally also, a similar trend exists, like in Japan from thirteen banks in 1990’s to just four now. The Areas that would require managing would be those related to Pre-merger, post merger and regulatory. Thus, the way forward according to him would be Consolidation.
After the wonderful presentation by Mr. Ashvin Parekh, went ahead with a tea break and resumed to start off a discussion on Business and Systemic Justification for Consolidation. The panelist of the discussion were Mr. K. S. Harshan, Executive Director, The Federal Reserve Bank Ltd., Mr. Neeraj Swaroop, CEO-India, Standard Chartered Bank, Mr. Alok Misra, Chairman and Managing Director, Oriental Bank of Commerce. The Discussion was chaired by Dr. A. K. Sengupta, Director, S.I.E.S. College of Management Studies. The discussion came forth with the pro and cons of consolidation. The advantages which would come out of it being in terms of Capital, HR and growth and the disadvantages being in terms of consolidation may not change anything for the consumers and also that India being a large and wide country, more number of banks in a way does make sense. It was discussed that the need of the hour may be that of Differentiation by the banks and not consolidation. Also when were consolidation is spoken of in case of the Banking sector of India it is usually referred to as that of Public Sector Banks and not private. So it may be important to note that the same consolidations may make equal sense for the private player and also cross-consolidation may be seen in the future.
The current market scenario was discussed the observation being that the customers are now much more demanding as compared to the past. Also the customers being widespread, scaling up is an option which is necessary to reach out to them and keeping in mind the foreign banks which would in the future be a big threat to the Indian banks, scaling up would make sure they have a healthy playing filed with the foreign competitors.
The Banks in India today seem to be caught in the QoQ syndrome i.e. the Qayamat sey Qayamat Tak syndrome where they keep working to ensure short term goals of good results are visible every quarter without keeping the big picture in mind.
The discussion ended with an extremely interesting question answer session which made every one ponder on the thought that in the sector moved from monopoly to perfect competition and is seen to be moving in the future from perfect competition back to a more monopolistic situation i.e. with only a few big players which would be present after consolidation.
Post the Lunch; the event was addressed specially by Mr. V Leeladhar, Deputy Governor, Reserve Bank of India. The speech was about the Payment System in Indian. He spoke about the past which started off with barter system to coins, paper, bills of exchange, cheques, plastic money and the present internet and mobile gateways. The need in India is a Safe, Secure, Speedy and Sound payment gateway system. The implication of the Payment and Settlements Act, 2007 were then discussed by Mr. V. Leeladhar along with the e-payment initiatives like Electronic Clearing System (ECS), Electronic Fund Transfer (EFT), Real Time Gross Settlement (RTGS), Internet Based Banking and Mobile Banking.
PART 01
PART 03
Courtesy : Manish Punjabi
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