IBA unveils Vision 2010 for banking industry

The profitability of the Indian banking sector will come under pressure due to intense competition and expansion into newer areas of fee-based business and cost rationalisation will help maintain growth, senior bankers said yesterday.

Indian Banks' Association (IBA) chairman V Leeladhar said that banks have invested substantially in technology which will provide a cutting edge to cut operational costs and maintain profitability. He was unveiling IBA's banking industry Vision 2010 in Mumbai.

IBA, under the chairmanship of SC Gupta, CMD, Indian Overseas Bank, has prepared a ten-point action report so as to prepare the banking sector for meeting various challenges.

Topping the agenda is the need for the banks to adopt global standards in capital adequacy, income recognition and provisioning norms.

While systems in risk management, payment and settlement and regulatory setup need to be strengthened, IBA itself sees a greater role as a facilitator for helping the banking sector during the consolidation phase.

Along with Nabard, it aims at helping banks in their effort towards capital structuring through mergers and acquisitions and other measures.

It was observed that capitalisation of the banks will primarily be done through raising capital from the market, however, easing of norms on FDI and FII will help capital infusion.