About Us Centre for Economic Policy Research, or CEPR is an in- dependent think tank, which works in macro-economy, politico-economy, public-policy, banking, agriculture, in- frastructure, energy, international trade, manufacturing sectors. CEPR helps government in shaping the policy, via sector reports, stakeholder consultations, policy briefs et al. Along with this, CEPR also helps the organ- isations to understand the public policy and the market scenarios. CEPR fills up gab between the industry and policymakers and strives to make both ends meet. Nationally, CEPR is network of nearly 50 odd profession- als and economists, who are regularly contributing to make the work more meaningful. At present we operate out of two offices, Noida in Delhi NCR and Chandigarh. Centre for Economic Policy Research Plot No. 658, Phase -1, Industrial Area, Chandigarh-160002 201, Vikram Tower, Grihaparvesh, Sector-77, Noida- 201304 Tel : 0120 - 4165609 [email protected] @ceprindia cepr.in IBC Conference Report 23-24 August 2018, ITC Maurya, New Delhi 3 INDIA BANKING CONCLAVE 2018 The noise around NPAs is because of the previous government. Banks were pressurised to give loans to big businessmen; this scam was bigger than commonwealth, 2G or coal scam. The NDA government is taking steps to secure the banks and depositors.” Narendra Modi Prime Minister of India 4 INDIA BANKING CONCLAVE 2018 CONTENT The Future of Indian Banks 8 Objective 13 Session List 14 Day 1 Inaugural Session 16 Session 1: Indian Debt, Indian Problem, Indian Solution 20 Session 2: India and Development Banks 24 Session 3: FinTech for New-India 26 In Conversation: India, Plan 2030 & Banks 28 Day 2 Session 1: Small is Good- Funding The Unfunded 30 Session 2: Biting the Bullet Privatisation Vs Mergers 34 Session 3: New Dawn: Banks of Tomorrow 36 A Master Class with Union Minister Piyush Goyal 38 Valedictory Session: Banks for Rebuilding India 39 6 TEAM Gopal Krishna Agarwal National Spokesperson (Economic Affairs), BJP Independent Director, Bank of Baroda Chief Advisor, India Banking Conclave Dr. Subhash Sharma, Director, Centre for Economic Policy Research Convener, India Banking Conclave Veni Thapar, Independent Director, Bank of India Rajiv Kumar Singh, Independent Director, Union Bank of India Anil Sharma, Independent Director, UCO Bank Rajiv Lochan Bishnoi, Chartered Accountant Rajan Dogra, Independent Director, Vijya Bank Sunil Vashisht, Independent Director, Syndicate Bank Dr. Ashwani Johar, Vice Chairman, Centre for Economic Policy Research 7 INDIA BANKING CONCLAVE 2018 The Future of Indian Banks: Bright, Brimming and Inclusive his statement might sixth largest economy, but second largest in sound an overzealous op- terms of population, is to jump from pres- timistic to anyone, especial- ent $2.6 trillion engine to be $10 trillion ly those who understand the behemoth –surpassing the economies like churn country’s banks are Japan and UK—to compete with the Chi- going through. But if India nese, Germans and Americans. & for this Taspires to reboot the economy, the banks Indian economy not only require access to will have to be a strong backbone of the en- easier capital, but also much healthier and tire process. The aspiration of the world’s robust banks. 8 But at present, the bright spot requires end consumers for banks. They trust that real hard work to get noticed. In last two there is less business and more input cost, decades, the debt became bad debt, then and stayed away from getting deeper into they turned themselves into non-perform- the society. But the present regime doesn’t ing assets, or NPAs. This eventually led to think so. not only bleeding corporate balance sheets, And above all the technology is bring- but also drastically impacted the growth ing in the disruptions faster than many of engine of the country. The then chief eco- us would have envisaged. The forthcoming nomic advisor to the government called BASEL-III norms, would require banks this as duel-balance-sheet challenge. The more investments in the creating the infra- banks are shying away from extending the structure, making it secure and optimum credit, the banks turned conservative and utilisation of the artificial intelligence and consumers are looking at opportunities to big data to cut the operational costs and cheaper capital. The worst part is; there is understanding of the consumers better and no meeting ground and divide is deepen- efficient. ing. The two days of these deliberations were These NPAs and bad debts can be segre- designed as a thought provoking exchange gated into three categories; the investments of insights, ideas, laments and develop struck because of the bonafide business a quest for solutions. The effort was sup- risks, or due to lack of government clear- ported by country’s official think tank, ances; the corporate frauds, the funds tak- NITI Aayog as the knowledge partner. en out in connivance of bank employees. During these two days, six chairpersons of PM Modi’s regime chose to structurally various banks, nine MDs or CEOs, eleven correct the policy and regulatory hurdles, corporates honchos, along with the lead- including projects in Roads, Power, Iron & ership of RSS and ruling Bharatiya Janta Steel et al sectors. These include policy cor- Party participated in these discussions. rection, benign regulatory interventions The cabinet minister Piyush Goyal did an and restructuring of debts, along with im- hour long special session, and on the first proving the efficiency of the governance. day, NITI Aayog’s vice chairman, Rajiv Ku- But this requires to be complemented by mar and BJP’s General Secretary Bhupen- the financial institutions and their regula- dra Yadav shared their respective insights. tor, Reserve Bank of India. Commerce and Industries Minister, Suresh The challenges of the banks don’t end Prabhu couldn’t attend the conclave, but he here; the PM Narendra Modi led NDA shared his video message. government is pushing for bringing the India Banking Conclave, 2018 started marginalised population into the banking with an energetic session with Minister of channel. His efforts not only brought 32 State, Home Affairs, Kirren Rijju address- crore newer consumers, but is also transfer- ing the audience full of country’s best of ring the benefits –subsidies, aides, scholar- the best bankers, fund managers, invest- ships et al—directly into their accounts— ment counsellors, academicians, CAs and enabling a huge chunk of population there other professionals; the financial security to use the banks and their products. Tra- is an essential part of the national security. ditionally for the banks, they are the low & underlines, why PM Narendra Modi led 9 INDIA BANKING CONCLAVE 2018 NDA government is pushing for bring- tion, or PCA framework to improve the ing the marginalised population into the financial health of the banks. RBI placed banking channel. In this session, he was eleven PSBs -- Dena Bank, Central Bank joined in by National Organising Secretary of India, Bank of Maharashtra, UCO Bank, of Akhil Bharatiya Vidyarthi Parishad, or IDBI Bank, Oriental Bank of Commerce, ABVP –world’s largest student organisa- Indian Overseas Bank, Corporation Bank, tion. He picked up the point of developing Bank of India, Allahabad Bank and United the skill set of the bankers. Bank of India --under the PCA framework. The valedictory session was led by Na- Quickly following some of the PJ Naik tional Organising Secretary, Swadeshi led Committee’s report; for public sector Jagran Manch –economic thinktank of banks, in 2016, Banks Board Bureau, or Rashtriya Swayamsevak Sangh. The first BBB was formed, with intentions to clean technical session, Indian Debt, Indian up the processes, improve the governance, Problem, Indian Solution, the tone was set appointments of the chiefs, help strategies to evaluate the work done by the present and capital raising. NDA regime. The last four years, chose to This brings in the discussion on the way bite the bullet and decided to clean up the forward for the banks. And this is noth- mess our banks & financial institutes have. ing short of biting the bullet for the gov- The discussion had GC Chaturvedi, Chair- ernment. Mergers Vs Privaisation. These person of largest private sector bank, ICI- questions haunt every finance minister’s CI Bank, ex-Principal Economic Advisor mind, especially, in the second half of the of GOI, Ila Patnaik, Bain Capital’s Harsh liberalisation. Whether to go for mergers Vardhan, Ravi Krishna Thakkar, CEO of the public sector banks making them UCO Bank. These bad liabilities and hab- into a singular or a fewer banks is a great its of keeping these rots under the carpet option or country should privatise many of were actually killing not only banks; but these banks. State Bank of India merged all the whole system. This session was moder- its associate banks. On July 16, 2018 board ated by Executive Editor of BTVI. of directors of LIC decided to pump in PM Modi’s regime had two extensive re- capital in IDBI Bank to re-capitalize. The ports to begin their treatment; Financial discussion was moderated by Anil Shar- Sector Legislative Reforms Commission ma, a prominent chartered accountant headed by BN Krishna and the PJ Nay- and non-executive director at UCO Bank, ak led committee on the structure of the where Rathin Roy, member of PM Modi’s boards of Indian banks. Indian banks for Economic Affairs Council and director sure require massive overhauling; in the of NIPFP, Shyamala Gopinath, Chairper- way they understand their consumers and son of HDFC Bank and G Padmanabhan, risk associated with their consumers’ busi- Chairperson of Bank of India. nesses, their operations & to make them For last two years, the growing piles of more efficient, structures of the boards, NPAs is gathering the limelight. Rightly along with the ways to deal with the gov- so.