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|CENTRAL BANK OF INDIA|
are the Custodians of the Public Money
||Interview with R. K. Dubey,
Executive Director, Central Bank of India
What is your assessment of the current situation in the banking industry in India?
Indian Banking system plays a crucial role in the socio-economic development of the country. The system is expected to continue to be sensitive to the growth and development needs of all the segments of the society. The banking system is still evolving in India in a transparent manner in its dealings and adopting global best practices in accounting and disclosures driven by the motto of value enhancement for all stakeholders.
How do you view the Indian Banking sector’s significant progress since nationalization?
Banks are the custodians of the public money. Nationalization of banks was in accordance with our national policy of adopting socialistic pattern of society. Nationalized banks had the maximum deposits with them as compared to other banks. They are the lifeline of our financial system & significantly influence the economy of the country.
Although there were some criticism of this step of government initially but it was the necessity of the time to boost investment in the priority sectors & overall economic development of the country. After Economic Reform of 1991, the Indian banking industry has entered into the new horizons of competitiveness, efficiency and productivity. It has made Indian banks more vibrant and professional organizations.
Where does Indian banking sector stand compared to international banking sector?
Status of Indian banking industry when compared with other countries are:
Structure of the industry:
The number of large and medium domestic banks, tends to be much larger in developed countries as compared with emerging economies. This is perhaps reflective of differences in sizes of economy and the financial sector.
Share of bank asset in total financial sector assets:
In most emerging markets, banking sector assets comprise well over 80 per cent of total financial sector assets, whereas these figures are much lower in developed economies. Share of state-owned banks in total banking sector assets in the emerging economies, with predominantly Government-owned banks, tend to have much higher state-ownership of banks as compared with their developed counterparts. However, the dominant role of banks in financial intermediation in emerging economies, in particular India will continue in the medium-term; and banks will continue to be special for a long time in future.
Is measured by the percentage of a country’s banking sector assets controlled by the largest banks. In most emerging market economies, the five largest banks (usually domestic) account for over two-thirds of bank assets. These figures tend to be much lower in developed economies. This is an interesting factor that should be borne in mind while considering the way forward in consolidation in banking sector in India.
Internationalization of banking operations:
As per cent of total domestic assets, foreign-controlled assets increased significantly in several European countries (Austria, Ireland, Spain, Germany and Nordic countries), but increases have been fairly small in others (UK and Switzerland). Among emerging economies, while there were marked increases of foreign-controlled ownership in several Latin American economies, the increase has, at best, been modest in East Asian economies. Available evidence seems to indicate some correlation between the extent of liberalization of capital account in emerging markets and share of assets controlled by foreign banks.
As per evidence available, the foreign banks in India who are present in the form of branches seem to enjoy greater freedom in their operations including retail banking in the country virtually on par with domestic banks, compared to most other developing countries. Further, the profitability of their operations in India is considerably higher than domestically-owned and, in fact, is higher than the foreign banks operating in most other developing countries. India continues to grant branch licenses more liberally than the WTO Commitments.
What are the key issues for Indian banking today?
Which are the thrust area for banking today?
How do you look at the future of banking in India?
What will be the future strategy of CBI?
Our future strategy will be focusing on following areas:
What are you doing to improve your customer service?
Many initiatives have been taken by our bank to boost customer services:
How do you see banking industry in 2020?
As said above banking industry is still emerging in India as compared to their counter part in the developed economies. But we are very fast in adapting new technologies & products to give a neck-to-neck competition with the global players. Technology implementation & skilled staff will be the key component to lead the race
Priority sector target not met in many cases. What could be the reason?
The priority sector advance fell down due to declassification of several bulk advances from priority sector to non- priority sector by RBI. Moreover there has been slowdown in MFI sector after the adverse development in A.P. however there is need for increasing the reach in untapped area.
What about recent activities of CBI?
Any comments on Government policy?
Considering the current liquidity status in the system, there is need for some monetary measures to ease the situation. There is need to follow fiscal discipline so that it support the monetary trans-mission effectiveness. Considering the softening of inflation & negative GDP growth, there is need to provide impetus to bank lending in terms of Rate-cut in phases.
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