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Informist, Thursday, Dec. 12, 2024

MUMBAI – A little more time is still needed for corporates to be allowed into the banking sector, K.V. Kamath, a veteran banker and chairman of Jio Financial Services Ltd., said at an event on Thursday. "Because I am seeing signs of rash behaviour...I'm being very frank about it...on the part of digitally driven enterprises, which, I think, the regulator will have to manage with great care," he said.

However, Kamath said the first step to reach the target of an $8 trillion economy would be to have a lot of large banks. He said he sees Indian banks running at 15-20% return on equity and that is good enough to meet the size of bulking up.

"The size of banks that we have today will have to expand dramatically. The good news is Indian banks are running RoE (return on equity) of upwards of 15%. So that comes to me almost like a perpetual cycle in India. Which doesn't mean we need external funding, because the question would have been, yeah, they need to bulk up, and where is the capital? Yes, capital is going to be large. But I see Indian banks running 15-20% RoE. That's good enough to grow at a healthy rate and meet the size of bulking up," he said.

On privatisation, Kamath said that if public sector banks are running with a return on equity of 15-20% then there is no need to privatise them. Instead, they should be given more freedom.

On the digital front, he said that all banks need to get going on the technology curve. He said the competition is now in how quickly processes work in banking space.  "You named people who want to get to be a bank. If they bring in the sort of technology which the customer is going to scream for and say, I want it. I think regulators will have to look up and say, we need to look at this too," he said.  End

Reported by Kshipra Petkar

Edited by Ashish Shirke

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