The Hindu Business Line : Banks urged to adopt global norms in capital adequacy

BANKS will have to remain innovative to ensure customer retention and satisfaction, according to the General Manager of Corporation Bank, Mr B.R. Bhat.

Delivering a lecture on `Future wave of banking' at The Hindu Business Line Club at Srinivas College of Postgraduate Management Studies, Pandeshwar, in Mangalore on Tuesday, he said the banks would have to evaluate the need to make structural changes in the organisation, including mergers and acquisitions. They will have to adopt global standards in capital adequacy, income recognition and provisioning norms, he said.

The continuous upgrading of technology and skills of personnel are necessary for banks to perform better.

Highlighting the advantages of the use of information technology in banking, he said the cost per transaction is the least in the case of Internet (online) banking compared to the branch banking. Driven by strong networking and e-payment mechanisms, banks will be more ATM- and Internet-oriented in the days to come, he said.

Though the country has a population of one billion, it has only 440 million bank accounts. Of these, only 44 million are electronically accessible today.

Mr Bhat hoped that the number would go up in the days to come, as a large number of youth prefer online and ATM banking than the branch banking.

Speaking on the impact of banking sector reforms in the country, he said opening of the Indian banking sector to private players acted as the turning point of transformation of the traditional banking.

The present capital adequacy of the Indian banks is comparable to those at international level. The banking sector reforms have also emphasised the need to review the manpower resources and rationalise the requirements by drawing realistic plan so as to reduce the operating cost and improve the profitability, he added.

Mr T. Ravi, Senior Regional Manager, The Hindu, Mangalore, introduced Mr Bhat to the meeting. Mr K.B. Monnappa, Assistant Regional Manager, welcomed the gathering. Prof P.S. Aithal, Principal of Srinivas College of Postgraduate Management Studies, proposed a vote of thanks.