The “Remaking” of Indian Banking

Our Team MembersNitin Boratwar ( 2013179)Pallavi Gupta(2013187)Payal Singh(2013196)Priyadarshi Tandon(2013211)Raghav Kabra(2013217)

“I see over the next few years a dramatic remaking of the banking landscape”

“Both from the . . . new banks which are going to come on board and the foreign banks which are going to be allowed to expand more freely. It will be a multiplier in terms of competition.”

“We need to clean up the bad loans. But at the same time cleaning up bad loans shouldn’t be seen as a witch-hunt, where you are going after everybody and this country’s not open for business”

In private, some foreign bankers have expressed skepticism about the new regulations, which come with expensive obligations to lend to poorer customers, as part of a wider RBI attempt to bring financial services to India's vast "unbanked" population.

International outfits such as Standard Chartered andHSBC account for only about 6 percent of Indian bank assets but Mr Rajan said the RBI's new rules provided a "huge" opportunity to grow by expanding into areas such as trade finance and even to "take over Indian banks at some point".

The past two decades the banking sector has been opened gradually to competition. As of last year, about a fifth of the country’s Rs96tn ($1.5tn) in bank assets were controlled by Indian private sector institutions.

Foreign bank’s freedom in domestic

banking

New private bank Licenses

Substantial advance in two

areas

“But Big test is still to

come”

Consequences

Huge Capital Needed In Public Banking System

Non-Performing Loans for Private Investment

Need to pump equity in order to retain share in PSB’s

What should the government do?

CAPITALIS

ATION

PRIVATISA

TION

CONCLUSION• Privatization is

needed to build

capital adequacy.

•Political support

needed.

• Changes will have to

wait till 2014 elections

CONTRIBUTION•Priyadarshi Tandon Introduction – Slides 1,2,3•Nitin Boratwar Substantial Advance in two areas – Slides 4,5,6•Pallavi Gupta Consequence- Slides 7,8•Raghav Kabra What should the government do? – Slides 9,10•Payal Singh Conclusion – Slide 11