Competition’s Healthy: India’s banking sector is inefficient and customers
pay the cost, making reforms imperative (TOI 16 Oct 2013)
Excerpts & Comments:

  • RBI governor recently promised banking reforms, which includes more operational freedom for foreign banks if they adhere to some conditions – Hope this is implemented on urgent basis. Will also help in financial inclusion.
  • Indian banking packs a lot of inefficiency, which is passed to consumers in terms of higher costs – we have 154 commercial banks. But it has not translated to lower costs for customer. UK banks’ fig is a testimony as per article. One thing we can vouch for is low service quality and higher costs. They cannot go hand in hand!!
  • Greater operating freedom for foreign banks. ‘Foreign banks in India have been a beneficiary of this protected environment, with their profitability here far exceeding what’s possible in their home markets.’ High time customer gets benefit. Increase competition through more foreign banks and their global benchmarks in service (I have supported entry for companies like Amazon to give customer world-class experience)
  • Issuing new bank licenses should be an on-going process. No need for so much hype on it either.

Let more players, local & global, come in.
The checks and controls should be tight to ensure overall, long-term health of banking system.
Let customer get better service. Let us ensure improved financial inclusion.

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