Indian Banking Sector
INDIAN BANKING SYSTEM: THE CURRENT STATE & ROAD AHEAD
ANNUAL SURVEY
September 2006
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Federation of Indian Chambers of Commerce & Industry
Federation House, Tansen Marg, New Delhi – 110 001
Executive Summary
India’s banking sector is growing at a fast pace. It has become one of the most preferred banking destinations in the world. Indian markets provide growth opportunities, which are unlikely to be matched by the mature banking markets around the world. FICCI conducted a survey to analyze the potential offered by Indian Banking System and achievement of global competitiveness by Indian banks. The questions largely revolved around where we are, how will India go about it, what structures need to be created and when will it happen?
▪ Some of the major strengths of the Indian banking industry, which have helped mark its place on the global banking scene as highlighted by our survey respondents were Regulatory Systems (84.21%), Economic Growth Rate (63.15%), Technological Advancement (52.63%), Risk Assessment Systems (47%) and Credit Quality (42.1%) ▪ Some of the areas that need to be geared up for future growth, identified by the survey respondents are Diversification of markets beyond big cities (84.2%), HR Systems (63.15%), Size of banks (52.63%) High Transaction Costs (47.3%), Banking Infrastructure (42%) and Labour Inflexibilities (42%). ▪ To a question on achieving global competitiveness, Consolidation in the financial sector has emerged to be the most significant measure required to create world class banking system followed by Strict Corporate Governance Norms, Regional Expansion, Higher FDI limits and FTA’s. ▪ On being asked to rate India on certain essential banking parameters (Regulatory Systems, Risk Assessment Systems, Technological Systems and Credit Quality) in comparison with other countries i.e China, Japan, Sinagapore, Russia, UK and USA, the following results emerged: ➢ Regulatory systems of Indian
ANNUAL SURVEY
September 2006
[pic]
Federation of Indian Chambers of Commerce & Industry
Federation House, Tansen Marg, New Delhi – 110 001
Executive Summary
India’s banking sector is growing at a fast pace. It has become one of the most preferred banking destinations in the world. Indian markets provide growth opportunities, which are unlikely to be matched by the mature banking markets around the world. FICCI conducted a survey to analyze the potential offered by Indian Banking System and achievement of global competitiveness by Indian banks. The questions largely revolved around where we are, how will India go about it, what structures need to be created and when will it happen?
▪ Some of the major strengths of the Indian banking industry, which have helped mark its place on the global banking scene as highlighted by our survey respondents were Regulatory Systems (84.21%), Economic Growth Rate (63.15%), Technological Advancement (52.63%), Risk Assessment Systems (47%) and Credit Quality (42.1%) ▪ Some of the areas that need to be geared up for future growth, identified by the survey respondents are Diversification of markets beyond big cities (84.2%), HR Systems (63.15%), Size of banks (52.63%) High Transaction Costs (47.3%), Banking Infrastructure (42%) and Labour Inflexibilities (42%). ▪ To a question on achieving global competitiveness, Consolidation in the financial sector has emerged to be the most significant measure required to create world class banking system followed by Strict Corporate Governance Norms, Regional Expansion, Higher FDI limits and FTA’s. ▪ On being asked to rate India on certain essential banking parameters (Regulatory Systems, Risk Assessment Systems, Technological Systems and Credit Quality) in comparison with other countries i.e China, Japan, Sinagapore, Russia, UK and USA, the following results emerged: ➢ Regulatory systems of Indian