Purwar sees mergers ahead

Mergers and amalgamations will be the rule of the game in Indian banking sector in the next 3-5 years.

As a result the banking system will be left with 4-5 world-class banks that would compete in the domestic market and complement each other in the global environment, said A K Purwar, chairman, State Bank of India (SBI).

He was delivering the keynote address at a seminar on 'strategic issues in globalising Indian banks.' The seminar was sponsored by Tata AIG General Insurance Company.

SBI has worked out a three-pronged strategy to become a world class bank, Purwar said. These include expanding the overseas operations, doing universal banking and in the process leverage the strength of its distribution network and specialised skills.

Speaking on the sidelines, he said that SBI plans to hike its retail lending portfolio to 30 per cent from the current level of 23 per cent.

He added that there is large scope for lending to retail and small and medium sector and this year the bank is planning to finance professionals such as doctors and teachers in a big way.

Besides, tourism has also been also identified as one of the core areas where the bank plans to finance curio shops, travel agents and taxi drivers among others. Commenting on the quarterly results, he said the interest rate is expected to firm up in the medium and long term and to that extent the treasury profits as well.

"However the spread will be compensated by repricing of deposit rate as assets are at rock bottom prices. Moreover, the bank will not have to do much provisioning from now on as it has already provided for last few years," Purwar said.

The bank has also put in place a fast track promotion policy to motivate employees, he added.