Banks must increase their global presence: RBI

 The Reserve Bank today advised banks to cautiously increase their global footprint, both organically and inorganically.

"...Indian banks should increase their global footprint opportunistically even if they do not get to the top of the league table," RBI Governor D Subbarao said at Bancon here.

In the wake of the global financial crisis, there has definitely been a pause to the rapid expansion overseas of banks, he said.

Nevertheless, notwithstanding the risks involved, it will be opportune for some of our larger banks to be looking out for opportunities for consolidation both organically and inorganically, Subbarao added.

They should look out more actively in regions which hold out a promise of attractive acquisitions, he said.

India has 81 scheduled commercial banks, of which 26 are in the public sector, 21 are private and 34, foreign.

Subbarao said that as per the current global league tables, based on the size of assets, the country's largest lender -- the State Bank of India (SBI) -- together with its subsidiaries, comes in at 74 number, followed by ICICI Bank at 145 and Bank of Baroda at 188.

On meeting Basel III norms, he said Indian banks are comfortably placed in terms of compliance with the new capital rules.

"...A few individual banks may fall short of the Basel III norms and will have to augment their capital. However as the phase-in time allowed is long enough, these banks should be able to make a comfortable adjustment to the enhanced requirement," Subbarao added.

The Basel III package includes capital buffers, which will entail additional costs for banks with consequent implications for investment and hence for overall growth.