Asks Indian banks to gear up for global competition

Union Finance Minister Pranab Mukherjee on Tuesday hinted at further opening up of the banking sector to foreign players and urged the nationalised banks to gear up for the global competition.

Speaking at the 105th Foundation Day of Bank of India here, Mr. Mukherjee said: “Indian banks have performed quite well. Their profitability is good. But this is not on a par with the global players. The global banking landscape is changing fast. Indian banks should use this opportunity to carve out a place for themselves at the global platform,'' Mr. Mukherjee added.

He stressed on the need for the banks to improve competitiveness through technological innovation and sustaining high earnings and profitability.

The government has already indicated that it might open up the Indian banking sector tor more foreign competition. The foreign direct investment (FDI) limit in Indian banks was likely to be raised further and more foreign players were likely to be allowed to operate from the country.

At present, 49 per cent FDI is allowed in banks through the automatic route and a further 25 per cent through approval of the Foreign Investment Promotion Board, taking the total to 74 per cent.

Mr. Mukhherjee further asked all the banks to overperform to achieve their targets so that by 2011, all habitations of 2,000 population and above would get the banking facility and related financial services. Earlier this target was set for March 2012.

Mr. Mukherjee said higher growth would have little meaning if poor and excluded people did not have access to basic needs based on equitable, sustainable as well as just and fair share of this national prosperity.

“Financial inclusion will enable all of us to broaden our base by empowering the poor by assisting them to improve their standard of life,'' he said.

Minister of State for Finance Namo Narain Meena, Department of Financial Services Secretary R. Gopalan and Bank of India Chairman and Managing Director Alok Kumar Misra spoke on this occasion.