Key Highlights From Indian Banking Association and FICCI Event in Mumbai #FIBAC2015

Speech by RBI Governor Raghuram Rajan

FIBAC is considered to be one of the largest banking conferences in Asia. Speaking at the opening session of FIBAC 2015, RBI Governor Raghuram Rajan said that the Indian environment has both challenges and opportunities. During the conference, the RBI governor emphasized the importance of inflation and its dangers. The governor believed that economic forecasting is difficult and that monetary policies have to cater them. Furthermore, quashing speculations about the weakness of Indian markets, Raghuram Rajan said that India is in a better position compared to other markets, but the economic growth is still below the level India is capable of.

Raghuram also said that the macroeconomic fundamentals of the country were stronger than the economies of many other countries. He stated that domestic markets need to be strengthened, and one way to do it is by way of increasing production and conforming to PM Narendra Modi’s Make in India vision. Talking about inflation, he said that expectations among public still remain high. He highlighted that the non-performing assets of banks are hampering the ability of banks to pass on the rate cuts. He also said that going forward, RBI has two priorities. The first is to help growth by bringing down the inflation, while the second is to work with the government and the banks to speed up the clearing of bank balance sheets, so that they are capable of lending to the major projects. The governor also spoke about a platform where the RBI has brought banks and NBFCs together in the virtual space to share and coordinate information on loans.

The governor also said that significant uncertainty will be resolved in the coming months’—namely, inflationary pressures, full monsoon outturn and US Fed actions. Rajan also believed that once the volatility subsides, India will re-emerge as a destination of choice for investments.

Excerpts From the Panel Discussion:

- Chanda Kochhar, Managing Director and CEO of ICICI Bank, said that technology disruption and the resulting competition is not new for the Indian banking industry.

- SBI Chairman Arundhati Bhattacharya said, Today’s generation cannot do anything which is more than four clicks. – Online origination will grow.

- Shikha Sharma, Managing Director and CEO of Axis Bank, underscored the importance of innovation in KYC to accelerate adoption.

- All the panelists agreed that consumer education in online banking is a priority.

During the event, The Boston Consulting Group had requested the RBI to work on three main themes—economics (where e-payments at the point-of-sale and online are feasible, fast and really cheap), quality (interbank payment infrastructure should be capable of sending information along with payments. This allows banks to provide value-added services on top of payment services) and transformation.