Universal appeal

Has the reincarnation of DFIs (development financial institutions) into universal banks affected resource requirement of industry and services? No, argues an essay by A. Karunagaran included in ‘Dynamics of Indian Banking: Views and vistas,’ edited by Manoranjan Sharma (www.atlanticbooks.com).

The author mentions how most of the developing countries that resorted to a calibrated process of financial reforms to foster efficiency and profitability found it difficult to sustain DFIs. For starters, he explains ‘universal banking’ as ‘the one-stop shop’ where banks provide all financial services along with the commercial banking, i.e. investment banking including selling of insurance products and so on.

While universal banks continue to play active role both in working capital requirement and term finance based on the commercial viability of the projects, it is necessary to develop the equity and corporate debt market needs, and put them into the shoes of DFIs, Karunagaran recommends.

Interestingly for M&A watchers, the recent acquisition of Laser Soft by Polaris Software has as its sub-text the coming together of core banking solutions of the former and the Global Universal Banking (GUB) of the latter under one umbrella.

Useful read.

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