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Our Bureau

Mangalore , Feb. 16

THE Chairman and Managing Director of Corporation Bank, Mr Cherian Varghese, has said that Indian banks have to break the limited contour of doing business with only ethnic Indian community abroad. They will have to become transnational banks having relationships with international clients.

Speaking at the national seminar on "WTO and banking sector in India" organised by the Corporation Bank Chair in Bank Management at the Mangalore University on Monday, Mr Varghese said though Indian banks have excellent human resources for overseas forays, they have to muster adequate financial resources to become significant players abroad.

In the domestic sector, Indian banks have to improve their efficiency and customer relationship management and update their technology. These measures will help outsmart the foreign banks, he said.

Mr Varghese said that Indian banks have to improve their efficiency by reducing their intermediation cost to offer loans at international prices. It will also have the implication of reducing the rate of interest on deposits taken by Indian banks.

"It needs to be seen whether this will affect the domestic savings rate, which is one of the highest at around 23 per cent. We also need to examine the systemic impact of foreign exchange exposure of Indian borrowers who do not have export earnings," he said.

Mr Varghese hoped that the dismantling of quota systems for textiles from 2005 might benefit Indian textile sector. Exports in textiles may expand substantially creating more employment and providing lending opportunities to the banking sector.

He felt that Indian small-scale sector might face a tough situation with cheaper imports into the country and removal of reservations for this sector. This will have implications for the employment generation in this segment and bank finance to the small-scale industries, he said.

Concluding his address, Mr Varghese stated that Indian banking system has enough talent to handle the implications of WTO on this sector. "With new opportunities unfolding themselves before us we should see India emerging as a global power in banking services in the next two decades," he added.

More Stories on : Events | WTO | Karnataka

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