The current slowdown in the Indian economy is a wake up call for banks. They should utilise the opportunity to restructure their balance sheets or recast their business-mix.
These were among the conclusions arrived during the Banking Colloquium 2013 organised by the Confederation of Indian Industry (CII), here on Friday. Chairman and Managing Director of Allahabad Bank Subhalakshmi Panse said this should be an opportunity for banks to restructure their balance sheets and “decide whether I need to change my business-mix’’. She felt this was also an excellent opportunity to tap the emerging markets in the Tier-III and IV cities, where the growth had now shifted, she added.
M. Narendra, Chairman and Managing Director of Indian Overseas Bank, said that the focus had now shifted from corporate and infrastructure lending to retail banking such as housing, education, and auto loans.
UCO Bank chief Arun Kaul said that the stress situation being faced by banks had made them diversify into innovative products on the retail side. Bankers concurred that their future lay in launching innovative products for the non-metro markets.
During a later session, P.K. Malhotra, Deputy Managing Director State Bank of India Project Finance SBU, said that SBI was expecting a retail growth of around 18-20 per cent during this quarter, which would be propelled mainly by retail segment.
Delivering a special address on corporate debt restructuring, Ms. Panse said that often promoters utilised the opportunity (of CDRs) to undertake financial restructuring when what was required was business restructuring. “There is also an unhealthy trend of undertaking cleaning up of balance sheets and fudging accounts. This is non acceptable” she said, adding that for a meaningful partnership, a CDR had to be transparent . “ Corporates have to understand their responsibility, and pledge shares and make the entire thing work,” she said.
A KPMG –CII paper on Indian Banking released on the occasion said that Indian banking was now at an inflexion point.