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Indian Banking Essay

7327 words - 30 pages

Indian Banking – The engine for sustaining India’s growth agenda
5th ICC Banking Summit Kolkata
18 May 2013

Foreword

Over the past couple of years, the Indian banking sector has displayed a high level of resilience in the face of high domestic inflation, rupee depreciation and fiscal uncertainty in the US and Europe. In order to stimulate the economy and support growth of the banking sector, the Reserve Bank of India (RBI) adopted several policy measures.

© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Capital adequacy will start becoming a big issue for the commercial banks in India, as they start gearing for growth and becoming compliant to Basel III guidelines.

To meet these requirements and challenges, industry players are gradually harnessing technology with cloud computing and analytics based on big data becoming a key differentiator. The budget referendum of allowing banks as insurance brokers is also a welcome move for the industry, which will gradually forge out a financial supermarket for the customers. With tele-density (based on total number of mobile connections) standing at 74.21, in 2012, according to Telecom Regulatory Authority of India (TRAI), India can consider the Kenyan model of ushering in financial inclusion through mobile banking services, including money-transfer systems and savingsand-loans services, through a simple SMS network. Leadership and the ‘right’ talent would be very critical for banks over the next 4-5 years as they work towards achieving their growth agenda and ward off competition for talent from the new local and foreign banks. The future operating model for banks would force banks to choose their areas of differentiation and expertise rather than aspiring to be a single service provider. This paper discusses the opportunities and challenges that lie ahead of the Indian banking industry. It also touches on some possible avenues for augmenting banking penetration in the strategically placed Eastern and Northeastern states of India.

Ambarish Dasgupta

Head - Management Consulting KPMG in India

President ICC

Rajiv Mundhra

© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Acknowledgements Ravi Trivedy Kunal Pande Neha Punater Kuntal Sur Jacob Peter Aniruddha Marathe Gaurav Batra Rohan Padhi V. Ramakrishnan Natasha Wig Ankur Jain Priya Aggarwal Bhargava Pingali Divya Kalari

© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Table of Contents
01 05 11

Indian Banking – Emerging Opportunities

Funding the aspirations of emerging modern India

Micro, Small & Medium Enterprise – The next growth engine for banking

15

21

25

Infrastructure financing – building the foundation

The Aam Aadmi – profitably serving the unbanked and underbanked

Innovative and cost effective operating models

29

35

39

Big Data as a source of real time business insights

Public sector banks – Challenged for growth capital

Addressing the leadership vacuum in the PSBs

© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG...

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