Competition's Healthy: India’s banking sector is inefficient
and customers
pay the cost, making reforms imperative (TOI 16 Oct 2013)
Excerpts & Comments:
-- RBI governor recently promised banking reforms, which
includes more operational freedom for foreign banks if they adhere to some
conditions - Hope this is implemented on urgent basis. Will also help in
financial inclusion.
-- Indian banking packs a lot of inefficiency, which is
passed to consumers in terms of higher costs - we have 154 commercial banks.
But it has not translated to lower costs for customer. UK banks' fig is a
testimony as per article. One thing we can vouch for is low service quality and
higher costs. They cannot go hand in hand!!
-- Greater operating
freedom for foreign banks. 'Foreign banks in India have been a beneficiary of
this protected environment, with their profitability here far exceeding what’s
possible in their home markets.' High time customer gets benefit. Increase
competition through more foreign banks and their global benchmarks in service (I
have supported entry for companies like Amazon to give customer world-class
experience)
-- Issuing new bank licenses should be an on-going process.
No need for so much hype on it either.
Let more players, local & global, come in.
The checks and controls should be tight to ensure overall,
long-term health of banking system.
Let customer get better service. Let us ensure improved
financial inclusion.
