India should consider allowing 100 per cent foreign investment in its banks and insurance companies, according to John McFarlane, Chairman, Barclays. In an interview with BusinessLine , McFarlane also said that demonetisation will make India very highly technologically advanced. He also said that Barclays has no plans to enter the retail sector in India. Excerpts:

What are your views on the improved prospects on global economy and the lower growth projection for India?

I think the International Monetary Fund is right that there is some optimism about the world economy. It is growing. But while it is a tale of a rapidly growing countries, it is equally a tale of the Western slow growth countries improving.

But the scale of the difference is enormous. While the IMF may put a shadow on the Indian economy, it’s from a very high base.

As a banker, what did you make of the demonetisation exercise?

The world can learn from India on retail mobile payments. Over 1 billion people are going to be digitally enabled to do mobile banking. It is a tremendous investment in the future and of course it will pay dividends. What it does, of course, is make India very technologically advanced.

What are the other reforms that you would expect from India?

I have been involved with India since the early 1990s. It has opened up to a certain extent in banking and insurance but not fully. I would like to see the day where the doors are open and banks and insurance companies can own 100 per cent in other banks and insurance firms. Because reciprocally, other countries allow you to own 100 per cent of their banks and insurance companies. The time should come although that promise was made decades ago. We are not holding our breath but we are hopeful.

Any plans to re-enter the retail banking business in India?

We are in the Indian market in the wholesale basis.

We take Indian companies internationally. In retail, no, we do not have any plans. We will concentrate in the UK, US and Germany.

What is your view on the bad loan problem?

It is destroying many countries but it is not universally true. Some of the richest banks in the world.. they don’t have these problems. It is not across the whole sector.

The journalist is in Washington D.C. as part of the IMF Journalism Fellowship 2017 to cover the Annual Meetings of the IMF and World Bank.

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