The Hindu Business Line : ‘Global crisis an advantage for Indian financial sector’

Hyderabad, July 24 Banks in India need not worry about the financial crisis in the US and some parts of Europe, according to Prof Prabhu Guptara, Executive Director, Think Tank of United Bank of Switzerland (UBS).

“Developments such as sub-prime crisis and growing defaults in loans and credit card repayments in the US are the result of jungle competition among the global financial giants. On the contrary, the situation in the Indian banking industry is largely healthy,” Prof Guptara said in an interaction with Business Line.

The impact of global development on our financial institutions would indeed be positive. “This forces the banking and insurance industry here to think and avoid those mistakes committed by its global counterparts,” he said.

There is an opportunity too for India in the current global economic environment. “It is time to open up banking and insurance sectors for further foreign direct investment as multinational insurers and banks are willing to invest more in India. There is a talk that FDI limit in insurance might be hiked to 49 per cent. And this is the best time to do it,” he said.

On the other hand, in view of the high credibility, Indian banks should also expand retail and other businesses abroad, Mr Guptara said. There is also a need for more innovative products and global competitiveness.

When asked about the difficulty being faced by Indian banks in getting regulatory approvals from regulators abroad, he said: “I understand that they are regulatory issues. But this is a reciprocal issue which should be worked out at an international level.”

On the key challenges for the financial sector, the UBS official said creating a vast talent pool for the sector is a tough task for India. “Though we find many Indians working in executive positions (for instance in the insurance sector) abroad, there is a need to nurture talent at other levels,” he pointed out.

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