Gazing into the crystal ball

This is in reference to Anup Roy’s article, “Banks of future will be very different, says RBI governor ’’ (February 25). Reserve Bank of India Governor Shaktikanta Das has classified four broad categories of future banks: a) Large Indian banks with domestic and international presence, b) mid-sized niche banks, c) small private sector banks, small finance banks, regional rural and co-operative banks and d) digital players.

But it will be the digital players who will disrupt the sector. Two decades ago, the new generation private sector banks, driven by technology and nimble ear-tothe-ground management, carved a niche for themselves. The digital players will not need to spend on large brick and mortar establishments due to the very nature and model of their business. The progressive new generation banks are alive to this threat and chalking out plans to take on the challenge.

What about the public sector banks? Mergers are on the anvil to create large banks. They may be large in size, but do they have the vision and wherewithal to survive in the digital war space? Will the management of these banks be able to motivate their personnel to rise to the challenge? Will the staff rise to the occasion, cocooned with job security and periodic wage hikes with no linkages to productivity? For too long, the public sector banks cartel has managed to secure their pound of flesh without matching productivity benchmarks or customer service satisfaction. If they don’t change, they will continue to lose business and relevance. Thus far the government has been supporting them with periodic massive infusion of capital. In the changing scenario, if they don’t pull up their socks will the government be willing to bite the bullet and allow the lethargic banks to fail?

K V Premraj Mumbai