At a period when bankers across the world are being termed as ‘London Whale’, hedge-fund sharks, and various other fatal creatures, Indian financial system remains intact despite its “boring banking” tag, industry innovator Deepak Parekh said today. Speaking at Motilal Oswal Annual Global Investor Conference here, the eminent banker and financial services giant HDFC Chairman said a rock-bottom degree of investment cycle in the united states has indeed taken a toll on the banking sector. Parekh said banks are taking unprecedented conquering amid issues like subprime crisis globally, collapse of finance institutions, Eurozone debt turmoil, rate rigging scandal and failures to prevent money laundering. “And, of course, the London Whale,hedge-fund heaven and sharks know how many other deadly animals are lurking in the financial world!
” he said in a lighter vein. “To my mind, the earning strategy for banks in India is ‘Basic Banking Model’ – what is otherwise known as ‘boring banking’. There is enough of retail business potential for all existing banks, new banks (as so when fresh licenses are given), NBFCs, and microfinance companies and other players,” he said.
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Parekh said there are various factors that will continue steadily to drive the Indian economy and consequently the Indian financial sector. “While trader or business confidence has taken a beating in the recent period, consumer confidence has continued to remain robust,” he said. Parekh has been at the forefront of top industry market leaders voicing their concerns more than a slow speed of economic reforms and the growing perception of plan paralysis lately. He said that banking further, the world over, works on the principles of trust and confidence and in the recent period and both have reached a record low.
Explained: Why aren’t vehicles selling? “Greed has trampled over trust, legality, and respect,” he said, while recalling a fresh word coined lately, ‘Banksters’ – implying that bankers were ready to dethrone gangsters using their despicable behavior,” Parekh said. “Today, there are no more any ‘Wall Street Stars’ or famous champions in the financial industry,” he added.
“Thus, the recommendation of ring-fencing retail bank from investment bank is now more persuasive now – at least among the regulators. The answer to bank scandals can’t be financial penalties, resignations, and tighter rules,” he said. Identifying retail concentrate as an integral for better performance, Parekh said that credit penetration in India is extremely low compared to countries like China, Japan, Malaysia, and Singapore.
Asking investors to have a “big picture” view, Parekh said banking will see exponential development by the finish of this 10 years. “Mortgages are anticipated to cross Rs 40 trillion by 2020. With a growing bankable population, by 2020, the number of bank or investment company branches is likely to twin from 2010 levels. This implies 70,000 more branches will be added. Similarly, there will be a five-fold upsurge in the number of ATMs.