No threat to established pvt sector banks from new entrants

Tags: News
New players in the process of making their foray into banking sector have enough growth opportunities and they will not be a threat to existing private sector banks, a top HDFC Bank executive said today.

"I think the market is large enough to support the growth of more new private-sector banks," HDFC Bank Deputy Managing Director Paresh Sukthankar said at the IIFL Investor Conference here.

"If you look at the last couple of banks that came in, they have done extremely well for themselves, but that does not mean that it has affected the growth rates of say ICICI, Axis or us, which are the older private sector banks," he said.

A four-member panel headed by former RBI governor Bimal Jalan is scrutinising applications for new banking licences, for which 25 entities, including those belonging to large corporate houses like Anil Ambani-led Reliance Group, Aditya Birla Group, Bajaj, L&T and Religare groups, are in the fray.

Other members of the committee include former RBI deputy governor Usha Thorat, former Securities and Exchange Board of India (Sebi) chairman C B Bhave, and Nachiket Mor, director on the central board of RBI.

Suthankar added that new players will take at least 5-10 years to establish themselves.

"Banks that have earlier tried to acquire retail loans primarily through sales agents, through third party distributors have had their challenges both in terms of acquisition costs and in terms of asset quality," he said.

On the impact of Basel-II norms on banks' return over equity, Suthankar said, "So essentially, if you have to maintain high single digit Tier I or low double digit Tier I, the peak ROEs will come off."

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Banks must learn from past mistakes to promote financial inclusion

    Prime minister Narendra Modi launched a massive financial inclusion programme yesterday titled “pradhan mantri jan dhan yojana’ (PMJDY), that will

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Could prohibition mean profiteering?

In the mid 1930s, an American journalist asked Bapu if ...

Zehra Naqvi

The five universal languages of love

Love is a universal language. Don’t we all believe that? ...

Dharmendra Khandal

Time to protect our endangered wildlife species

After 65 million years of existence, the earth’s biodiversity is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture