Banks should gear up for challenges: Rangarajan

Banks in India have to prepare themselves to grapple with future challenges like greater specialisation and reliance on non-fund business.

This calls for critical introspection and intelligent anticipation, said C Rangarajan, chairman, Economic Advisory Council to the Prime Minister, said.

Delivering the Karnataka Bank Founders Day lecture here, Rangarajan said banks may have to move away from excessive concentration on asset management and management of credit risks would have to be accorded high priority.

Significant improvements in customer service, management of exchange risks and equipping themselves to operate in a deregulated interest rate environment would be the challenges to contend with for commercial banks, he observed.

"Size need not be synonymous with success," Rangarajan said and added that the hardening of interest rates in the past two years had affected the performing profit and net profit of the scheduled commercial banks.