Banking more of an opportunity than a challenge in India

Banking more of an opportunity than a challenge in India

Mumbai: Bankers see the future of the sector in India as more of an opportunity than a challenge even as it may involve changing the way banking is done in India.

To be sure, daunting challenges abound, and banks have to gear up to meet these, said Bank of Baroda chairman and managing director M.D. Mallya at the Mint Annual Banking Conclave in Mumbai on Tuesday. These challenges mainly emanate from growing aspirations of customers, leadership and diversification of skill sets, effective use of technology, attracting and retaining talent in the public sector and most importantly financial inclusion, he said.

Risk-management practices also pose as a major challenge in the Indian banking space, said Neeraj Swaroop, regional CEO, India and South Asia, Standard Chartered Bank.

According to Stuart Fraser, chairman of policy, City of London, the capital requirement in infrastructure space is perhaps the biggest challenge for India right now and the economy needs to open up more. The biggest risk to the funding need and the economy is “the opening doesn’t happen fast enough or doesn’t happen at all." Otherwise growth may get affected because of lack of financing, he said.

Aditya Puri, managing director of HDFC Bank Ltd, said the banking space of the future offers more opportunities than challenges.

According to Puri, financial exclusion is not an India-specific problem but developed countries such as the US also suffer from it. Financial inclusion should not be the responsibility of banks only but all financial market stakeholders, Puri said.

While Chanda Kochhar, MD and CEO of ICICI Bank Ltd, said a new set of customers are going to demand huge funds from banks in the future, lenders need to gear up to service them.

“This is an immense opportunity if we put the building blocks correctly," said Kochhar.

State Bank of India chairman O.P. Bhatt said that to meet the banking needs of the future, the banking model in the country has to change and a new business model has to emerge with “layers of partnership."

“If the Indian economy is to grow at the present rate, a large mass of people has to be included in the banking fold and the current model of banking business as pursued now will have to undergo a change," as the present model will be too costly and will take time to reach the targeted customers, Bhatt said.

The new business correspondent model can be developed further, which may give birth to quasi-banking and alternate channels of banking, he said.