India needs more banks for financial inclusion: bankers
India needs more banks to meet the financial needs of its people, said the leaders of the two largest lenders as they spoke about the future of their industry in a webinar organised by Business Standard.
Rajnish Kumar, chairman of public sector State Bank of India (SBI), and Aditya Puri, the outgoing leader of privately owned HDFC Bank, said governance of a lender matters more than its size.
"Consolidation does help in one aspect of managing large credit and project financing. For financial inclusion, you need many banks," said Kumar.
"Consolidation for the sake of consolidation" is not feasible because demand for financial services exceeds supply in the country, said Puri.
Puri said India's banks are safe and "dire predictions" about their finances due to the impact of the coronavirus pandemic had "not come true". There has been "some uptick" in banks nonperforming assets but the problem was "not disastrous".
Meanwhile, At beleaguered European banks, coronavirus is fast-tracking plans for fundamental restructuring after years of poor performance. Many of the region's most prominent lenders are tearing up old business models, cutting business lines or doubling down on domestic markets as they try to find a formula that works for them.
HSBC Holdings PLC is returning to its Asian roots and calling time on weak returns in continental Europe and the U.S. with a plan to shed 15% of its workforce. The Netherlands' ABN Amro Bank NV, once a top-15 global bank with deep roots across the world, is getting out of trade financing and cutting off corporate customers outside Europe. Switzerland's Credit Suisse Group AG and UBS Group AG are stripping out layers of administrative workers to free up money for investment in technology or new business.
Banks around the world have been squeezed by the pandemic. In the U.S., Wells Fargo & Co., for example, is slashing costs and cutting staff to try to ride out the crisis, moves that could hold clues for how other large US banks may respond.