The Hindu Business Line : ‘PSBs rising up to compete with foreign banks’

Mr P. Arivanandam, Deputy General Manager and Circle Head, Indian Bank, Madurai, addressing a BL Club meeting at Thiagarajar School of Management, Madurai. –

Our Correspondent

Madurai, Sept. 25

Public sector banks (PSBs) in the country are equipping themselves to successfully take on the challenges by the entry of foreign banks into the country in 2009, said Mr P. Arivanandam, Deputy General Manager and Circle Head, Indian Bank, Madurai, here.

Addressing a ‘Business Line Club’ meeting at Thiagarajar School of Management (TSM) on ‘Changing face of banking in India’, Mr Arivanandam said the entry would certainly help raise the efficiency of the banking sector in the country. It has already undergone many changes. The sector which remained in private hands as an exclusive preserve of the elite section of the society before 1969, was opened up to masses through nationalisation and made to become part and parcel of the developmental process of the country.

With privatisation and globalisation in place since 1990, the sector found competition in the form of new generation private sector banks. Technology adoption in the form of core banking solution (CBS) and improvement in ambience of bank set up and customer service are currently in progress with many PSBs. Branch banking has given way to bank banking.

Various facilities

The ATM facility, plastic money and Internet banking have revolutionised the banking scenario in the country. Any time and any where banking have become the order of the day. Further, to reach out to the masses, especially in the rural areas where many do not have bank accounts, a financial inclusion programme is currently witnessed and agriculture loans are offered at lower rate of interest of seven per cent. ‘Doorstep banking’ is the extension in this trend, he said.

The entry of foreign banks into the country in 2009, whereby they can open their own branches, is sure to bring about a tremendous change and the public sector banks are in for fresh challenges, he said. Conscious of this, PSBs are also diversifying to suit the requirements of the customers by turning into a financial super market, offering multi-various fee-based services under one roof, selling products of insurance and mutual funds, gold coins, holiday packages etc..

Compared to the foreign banks, the size is going to be a challenge and mergers and acquisitions are being thought of and resorted to.

Retail segment

Overall, the business model is undergoing a change and the focus for survival in the future will be in retail segment, penetration in rural areas and evolving suitable strategies to attract sophisticated young customers, he said. The interaction section witnessed lively discussion on risk management, data back up and security, effect of rupee appreciation and more.

Mr T. Murali, Regional General Manager, The Hindu, Madurai, Dr Mattapalli Naga Raju, Principal, TSM, and Prof R.M. Somasundaram, TSM, were present.

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