How undervalued are Indian banks?
Of The Year
ICICI Bank CEO & MD K V Kamath
Can the banking system support Indias growth?
Bankers are tweaking their products to attract customers.
Will they bite?
Urge To Merge
The only option left for weak & small co-operative
banks is to merge with bigger peers
Banks bounce back in 2005-06, posting a growth in
net profits and reducing NPAs
All the data you wanted on banks
on Co-operative banks
of PSU, Foreign & Private banks
Industrial and Commercial Bank of China (ICBC) created history last
month by floating the worlds largest initial public offer,
beating the eight-year old record of Japans NTT Mobile Communications.
Listed in Hong Kong and Shanghai, ICBCs market capitalisation
is now about $158 billion, which is more than double that of all
listed banks in India. This is a telling commentary on the scale
of Indian banks, particularly when the economy is growing at over
8 per cent and the corporate demand seems to be insatiable.
India Inc has a capital expenditure plan of over Rs 9 lakh crore
over the next five years, the infrastructure sector needs another
Rs 14 lakh crore. This means the total demand for resources in 2011
will be one and a half times of the outstanding loan assets of the
entire Indian banking system today.
our banks live up to this challenge? The Round Table discussion,
the excerpts of which have been carried in this magazine, focuses
on this key issue. Eight leading bankers, who control about 55 per
cent of the industry, and a representative from the government,
which is the majority owner of public sector banks accounting for
roughly 75 per cent of the industry, have tried to answer some of
the critical questions relating to resources, capital, consolidation
cover story too deals with the same subject in a different way.
While Indian banks are far behind their global counterparts in terms
of assets, capital and market capitalisation, they are comparable
with the worlds best on some of the efficiency parameters
like return on assets, return on equity and so on. They are minnows
in terms of market capitalisation but the price-to-book value of
some of the Indian banks is much higher than their global peers.
So the crying need is scale. The industry is fully aware of this
and a few weak players in the private sector have already taken
the plunge by merging with stronger compatriots.
M&A wave has spilled over to the co-operative banking space
too, thanks to the uncompromising stance of the Reserve Bank of
India to put the co-operating banking system in order. A report
on cooperative banking deals with this phenomenon. While the consolidation
phase has just started, innovation has already become the buzzword.
Private and foreign bankers are not the only ones to believe that
innovation is necessary to engage customers and build business.
Even the normally staid public sector banks are going off the beaten
track to protect their turf and grow. A case in point is the recent
strategic alliance of three public sector banks.
Banking Annual is also about celebrating success. The Best Banker
award (decided on the basis of a poll among Business Standards
senior editors) goes to KV Kamath of ICICI Bank for being innovative
and creating the retail market in the Indian financial space.
this comprehensive snapshot of where the banking industry has arrived
in its increasingly exciting journey.