What are the challenges facing the Indian banking industry?
The concerns are several. First, we have to find a way to participate in the major growth expected both in the semi-urban and rural economy. Then we have to ensure that our risk management practices are such that our non-performing assets are under control. There has to be a balancing of social and financial objectives. This has to be followed by consolidation. What do you think of consolidation in the Indian context? The fact that you need consolidation in the banking sector is a given thing. There are 90-odd scheduled commercial banks in our country, thus fragmenting the customer pie. This increases cost for banks, reduces profitability and the customer also does not get the best deal. Consolidation in the private sector will not change the structure of the banking industry. For anything to really happen, it has to happen in the 70 per cent space occupied by the public sector banks.
