| 32 | “The Jan Dhan-Aadhaar-Mobile trinity has done wonders for financial inclusion in India” Till the debt market becomes more accessible to lower-rated companies and structured products evolve, banks will continue to be the principal sources of fundraising What growth opportunity do you see for the banking sector over the next few years? The outlook for the banking sector is encouraging as it is linked to the growth prospects of the economy. As the Indian economy moves towards achieving the US$ 5 trillion mark, we should see sustained growth of 8% per annum for the next five years or so. For this, we need large doses of investment. This is where we see banks playing a critical role. Other avenues of fundraising like ECBs or the corporate bond market are restricted to the larger and better-rated companies. A lot of investment is required to drive the economy and we can see banks doing the heavy lifting here. We see growth coming from retail, services and agriculture besides industry. The SME sector also has a dominant role in generating growth and employment, and hence, banks will continue to be frontrunners in the field of finance. India’s banking and financial sector has one of the most diversified sets of firms ranging from big public and private sector banks to regional banks along with payments banks and non-bank lenders. How does this ecosystem contribute to the resilience of the country’s financial sector? All these are niche institutions with commercial banks being the agglomerates that cater to the diverse needs of the economy. The idea of having these specialised banks is to address the sector-specific requirements of customer segments. This also ensures that the spillover effects from one segment to the other do not happen easily. India has a target to become a $5 trillion economy soon. What role will the banking sector play in achieving this target? As India moves towards the US $5 trillion mark, the country will need both investments and working capital. And, as stated earlier, it is not just the industrial and services sectors that will contribute to this target. The housing and auto segments within retail and agriculture will require a constant flow of funds which is being met principally by banks. As innovative fundraising vehicles, such InvITs and REITs evolve, we will see infrastructure finance move partly to the debt market over time. But till such time that the debt market becomes more accessible to lower-rated companies and structured products evolve in a big way, banks will continue to be the principal contributors. VIEWPOINT: BANK OF BARODA Ajay K. Khurana ED, Bank of Baroda | 33 | There has been a great push by the government and the banks to take banking services to every doorstep in the country in recent years. How is this goal of achieving universal access to bank credit revolutionizing banking in the country? India has been at the forefront of a revolution to make banking and financial services accessible to every Indian. Access to banking services helps in opening credit, contingency planning and wealth creation. The Jan Dhan-Aadhaar-Mobile trinity has done wonders for financial inclusion in India. This has brought more people into mainstream banking. With over 470 million accounts opened thus far, the next trinity of UPI, e-KYC and Account Aggregators is expected to enable another revolution by providing customised and inclusive credit services. Banks have also been effectively using the Business Correspondents (BC), who act as an extension of a bank branch in remote locations. At Bank of Baroda, we see the Business Correspondent network as integral to our efforts towards financial inclusion. For instance, from a ratio of 2:1 (two BCs for every bank branch), we have grown to five BCs for every bank branch. Further, co-lending by banks and NBFCs is gaining popularity. By marrying the lower cost of capital by banks and the deeper reach of NBFCs, it reduces the borrowing costs for the under-banked segment. How are Indian banks leading the digital transformation of the financial sector in the post-COVID environment? The digital revolution has disrupted almost every industry and banking is at the forefront of this revolution. Even before the pandemic, the industry’s digital transformation was underway and COVID has only accelerated the shift. One of India’s largest public sector institutions with an over 100-year legacy, the Bank is counted among the top ‘new-age’ banks in India today. We have adopted a digital-first operating model to deliver a better customer experience, reduce costs and increase cross-selling opportunities. How are you leveraging India’s global leadership in digital and contactless payment systems to create a world-class bank? The bank’s motto for digital transformation is “Accelerate”. Transformational initiatives such as the bobWorld app, our mobile banking platform, and our Digital Lending Platform (DLP) are integral parts of the digital ecosystem that have transformed the bank and empowered our customers and employees. Within a year of the launch of our all-in-one super app, bob World, it has garnered over 25 million users and hosts over 240 features. These range from credit score checks, payments, and digital loan requirements to e-commerce transactions. The bank has set ambitious goals for FY2023, including a 25% increase in retail deposit bookings through mobile banking, thereby reducing the cost of operations by 25%. We have also introduced contactless wearable payment instruments such as wristwatches and keychains. The bob World Wave watch is a payment instrument for making contactless payments as well as a fitness device. The global economy faces the prospect of an economic recession and a sharp rise in interest rates in future. How resilient is the Indian banking system to this? Indian banks have come out quite satisfactorily post the Asset Quality Review (AQR) conducted by the RBI and have learnt several lessons. With the enhanced rigour being shown beforemaking lending decisions, there is a right blend of caution and aggression while growing the loan book. The quality of corporate credit demand is good, coming from reasonably strong and experienced players and it should be sustainable. Having learned lessons from the past, the Indian banking system is better prepared to go through this phase. How can India export its expertise and excellence in banking and finance to other markets and become a global leader? One of the major objectives of “Digital India” is to achieve the “Faceless, Paperless, Cashless” status. During the last three years, digital payment transactions have registered unprecedented growth and UPI has been the outstanding performer. After resounding success in the Indian market, UPI is ready for the international markets aswell. UPI is already live in Singapore, and work is underway in the UAE. NPCI is in discussions with over 30 countries to enable the acceptance of remittances through the implementation of UPI. •
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