Public sector banks will lose out to competition

Solomon Raj

Solomon Raj is one of the most knowledgeable and experienced bankers in the country, having held high positions in both public and private sector banks. A former deputy managing director of the State Bank of India, Solomon Raj was handpicked by the Hindujas to become the first managing director of IndusInd Bank, a premier new generation private sector bank of the country. Presently, he holds the post of vice chairman in Hinduja Finance Corporation Limited, another leading Hinduja group company.

In this exclusive interview, Solomon Raj expresses his opinions about the Indian banking industry, the NPA problem, the role of public sector banks in the future and how he sees the banking industry evolving over the next three-year period. Excerpts:

domain-B: How do you assess the prevailing environment in the Indian banking industry?

Indian financial markets are increasingly converging with global markets, as a result of which the standards in the Indian financial sector are undergoing a process of refashioning to conform with global best practices. Banks are in the process of absorbing new technologies and it is here that the new generation banks are in the vanguard.

These new banks are setting the pattern of change in the banking sector. Financial products available internationally like net banking products, e-commerce products, e-broking, etc. are now increasingly available in India.

Public sector banks which control almost 80 per cent of the market are coming under increasing pressure from these new generation banks and unless they pull up their socks, they will lose market share drastically. The public sector banks must concentrate on upgrading their technology and becoming more customer-friendly.