What is it that makes Indian industry take an optimistic
view of its scope for growth in an economy riddled with inflation and a
not-too-evolved range of capital finance products? Should foreign banks continue
vying with Indian banks for a share of the wholesale banking pie, when other
BRIC countries such as Russia and South Africa require minimal procedures for
new ventures?
Players in the wholesale banking scenario in our country
need to gear up, to cash in on opportunities as number of outbound acquisitions
increase. Besides, as foreign trade gets bigger, it is imperative for wholesale
banking to focus on trade and treasury requirements. But these are extremely minor
challenges which can be easily overcome by the banking industry, if it has to
make an impact in today’s fiercely competitive Asian market - one characterized
by China’s steep growth of over 10% per annum in the next five years.
However, despite revenue slowdown and a fall in market capitalisation
in the last two years, the future of wholesale banking in India holds promise. One
positive factor contributing to this is the simplified FDI regulations which have
opened up avenues like deal structuring and treasury and trade finance. Banks
can meet these challenges by developing high-end technology platforms and
talent pools. An off-shoot is that banks have begun to pursue smaller or
mid-sized corporates for funding.
Another heartening factor is infrastructure, the raison
d’etre of wholesale banking which will get a massive fillip in this year’s Five
Year Plan (2012-2017). This means big time project financing in terms of lending,
debt syndication and capital raising. But are banks ready to take the leap? If
yes, then wholesale banking which currently contributes to 30% of India’s total
banking revenue will see a spurt more than double its value.
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