Indian Bank Association

-WD Team

Annual General Meeting of the Indian Banks’ Association was held yesterday on 26th May 2006. The association has 118 ordinary members and 31 associate members and is a strong association that can influence the banking sector in India. The Chief Guest was India’s Finance Minister Mr. P. Chidambaram.

The roots of the association was set in 1944 but was formally established on September 26, 1946. Sir Homi P. Mody was the first Chairman and the current Chairman is A. K. Purwar. “The year 2005-06 the economy has done very well. We have achieved a growth of 8.1%. This growth has been propelled by a robust industrial sector. The banking sector has achieved a spectacular growth with deposits grown by 24.05%. The challenge is to capture the new generation as customers, who are high on technology and short on time. They require access to multiple delivery channels as ATM’s, ebanking, etc.” spoke Mr. Purwar in his speech.

Mr. P.Chidambaram, wearing his trademark crisp white shirt and ‘lungi’ spoke in a language and specifically in a tone similar to reading India’s budget. Speaking fast, he did push in a long speech in 30 minutes. “India is over-banked and under serviced,” stated Mr. Chidambaram. Adding, “Poor Indians are bankable and credit worthy. Banks need to realize that poor need short term credit. Including them can increase a large number of people in the banking fold. Rural credit system is in shambles. The main burden should be bourne by co-operative banks is being handled by large commercial banks. This should be changed,” the minister emphasized. According to the minister, “SME contributes 40% of India’s production and 30% of exports, employing more than 80% in organized sector. There are only five Indian banks in the top 500 banks in the world,” spoke a sad minister who wanted Indian banks to consolidate to merge muscle and financial power to make banks more stable and achieving greater creditability globally. He gave an example of Malaysia, where 150 banks merged to become 4 large power-banks. The Indian minister wants something similar and hopes that Indian banks will voluntarily consolidate.

Mr. P. Chidambaram refused to speak to the press and clear doubts regarding his recent goof-up of the stock market memo that he sent. Now was that a real goof-up or a well thought of chess move? Only the finance minister’s mind can tell us.