With reference to the report, "HDFC Bank beats major European peers on m-cap" (July 13) by Krishna Kant and Samie Modak, it is heartening that the bank has bagged the sixth rank for global market capitalisation. It fills us with pride and confidence about India's financial system.
Beyond market capitalisation and individual rankings of the best-run private bankers in the country, some hard facts, too, indicate that the Indian economy continues to be built on strong financial fundamentals - the reason why it has been able to stand up to the stiff challenges posed by the global slowdown and the mounting non-performing assets (NPA) of banks and financial institutions the world over.
The ever-improving performance indices of private sector banks in the country bear signs of a maturing economy. Government initiative to open up the banking sector to private entities - started by awarding licences to private sector investors over a year ago - would get a further boost. Availability of quick finance to a wider section of people could become a reality in the near future.
Private sector banks would be expected to fill the void in the marketplace created by strained NPAs of state-owned banks since the recapitalisation process in such banks could still take a while longer.
Institutionalisation of asset quality review, initiated by the Reserve Bank of India as part of a "deep surgery", has seen public sector banks attain a greater degree of transparency and more control on their risk-taking abilities due to faster identification of defaulters before the end of the financial year. This has, in a way, prepared public sector banks better to target an economic growth of 7.8 per cent to eight per cent for 2017.
For the last three years, private sector banks in India have ranked higher than foreign banks in terms of return on assets and return on equity. Whereas on return on assets, the private sector more or less maintained parity with foreign banks, on return on equity they outperformed the latter significantly.
The natural expectation is that these positive developments would prompt the private sector to become more aggressive regarding investments in the growth sectors of India's economy and thus partnering in its growth.
M L Kabir, Kolkata
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