The captioned conference was organized by the
National Institute of Bank Management, at its campus in Pune.
Pune: The Panel Discussion on Moving Forward: Challenges and Opportunities were chaired by the panel comprising of eminent practitioners like Shri V. G. Kannan (CEO, IBA), Shri Hemant Contractor (Ex-CEO, PFRDA), Shri Anand Sinha (former Deputy Governor, RBI) and Prof. M.S. Sriram (IIM Bangalore). The event was moderated by Prof. Sanjay Basu, faculty, NIBM.
The introductory address was given by Dr K.L.
Dhingra, Director, NIBM. He highlighted the implications of the 2019-20 Union
Budget proposal for the banking and financial services sector. Shri V.G. Kannan, outlined the need for
broad-based credit growth, the contrasting trends in GNPA and NNPA, the dangers
of interconnectedness between financial sector entities and the acute liquidity
crunch for NBFCs. He emphasized on regulated adoption of fin-tech, to achieve
the twin goals of quality customer service at a reasonable cost and cyber
security. He also spoke of sustainable project finance and the role of the
corporate bond market. In his opinion, such developments necessitate the
preference for specialists over general cadres in HR policies of banks.
Shri Hemant Contractor struck a note of
cautious optimism. He felt that the NPA crisis was due to the lack of credit
appraisal skills for infrastructure projects, dearth of experience in loan
syndication, inadequate monitoring and the pressure of annual loan targets. He
suggested that dual control of PSBs, by the RBI and the government may also
have contributed to the crisis. He insisted on higher ROA and a stronger CRAR regime
as prerequisites for access of PSBs to global capital markets. He urged them to
leverage on fin-tech, to maximize the benefits from PMJDY.
M.S. Sriram explained the problems with long-term forecasts, for credit
appraisal, in good times. He argued for the revival of DFIs, to ensure (i)
availability of specialized credit management skills and (ii) mitigation of
concentrated risk. He also highlighted the need for more diversified loan
portfolios, with due weightage to retail and SME segments, which are weakly
linked to economic cycles. In contrast, corporate credit is much more strongly
correlated. In conclusion, he reiterated the need to implement the bank reform
agenda, before further consolidation measures.
Former Deputy Governor, RBI, Shri Anand Sinha,
began with a distinction in NBFC regulation between India and the developed
economies. He pointed out that the Indian approach is more structured. He also identified
a few areas of improvement for the Indian banking sector. These include (i)
credit culture (ii) capital planning process (iii) adherence to stringent CaR
norms and (iv) ethical standards in governance. He concluded with an argument
in favour of continuation of bank funding of infrastructure projects, supported
by the development of credit derivative and secondary loan markets.
The function concluded with a series of questions from the moderator and the audience.
This news was update on July 11, 2019 on receiving a request for update from the source.
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