The inevitable is happening. The Indian economy, which was growing at an impressive pace, appears to be losing its steam, as the fallout of the global meltdown has all but swamped its track. The available data indicate that the GDP growth of the nation decelerated to a four-year low of 7.9% y-o-y in the first quarter of FY2008-09, with the prospect for FY2009-10 looking even more dismal. Given the fact that the subprime crisis, which triggered it all, emanated from the financial and banking sector of the US, it is anybody's guess as to what awaits the banking industry in the next couple of years.
However, that has not stopped the Indian banks from claiming their rightful positions in The Analyst annual list of Top 500 Indian entities. While State Bank of India, India's premier public sector bank, occupies the 5th position, compared to 6th in the last year's list, ICICI Bank—which was forced to come out with a clarification after its shares nosedived steeply this year, eroding its market capitalization by Rs 82,222 crore, on worries about the bank's mark-to-market exposure to subprime US assets—sits at a comfortable position of 8th, an improvement over its last year's ranking of 9. While the banking sector has done better than other sectors in The Analyst 500, the fact remains that the Indian banking industry has not yet realized its vast potential chiefly because of the slow pace of structural reforms and the presence of a large number of unbanked in the country. Given the shakeouts and the changes that are taking place in the banking industry at the national and global levels, the Indian banking sector will have to face and address quite a few challenges that include, among others, seeking and serving new markets, embracing technology, taking a final call on outsourcing, and financial inclusion. |
