The Hindu Business Line : `Banks must assess their competence before going global'

THE Indian banking sector should reassess its core competence and embark upon programmes for making its global presence a more profitable and rewarding proposition, said Dr N.K. Thingalaya, former Chairman and Managing Director of Syndicate Bank.

In a study titled `Indian banks: Profitability, popularity and publicity,' he said that the banking sector is changing very fast worldwide. Taking advantage of this scenario, the feasibility of the Indian banking system emerging as a global player has to be carefully pursued.

The study, which is based on the financial results of various banks for 2003-04 , notes that Indian banks have a very low profile in international banking. Most of them can be seen in countries having a sizeable population of Indian origin.

Dr Thingalaya said that there has been a shift in emphasis from banking services to the expansion of business profits. Following this, banks are opening more branches in urban centres. Of the 534 branches opened during 2003-04, 218 were opened in metros and 275 in urban centres.

Even smaller banks in the private sector are moving out from their traditional area of operation.

Most of them are moving into business centres across the country. Many small towns, which are emerging as growth centres, have not made any impact on banking business.

On the improvement of viability of small branches, he said that the installed capacity of these branches should be fully utilised.

He suggested that their fee-based income be raised. With good branch connectivity, they can be developed as mini-financial supermarkets.

Analysing the non-performing assets (NPAs) of various banks, Dr Thingalaya said that the contribution of non-priority sector advances to the total NPAs was slight higher than the priority sector advances.

During the period under study, more NPAs were reported from advances to small-scale industries than from agriculture advances.

The study analyses the 2003-04 financial reports of 47 banks.

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`Banks must assess their competence before going global'