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The Jaipuria Institute of Management organised its fifth two-day annual conference on Universal Banking - Prospect And Challenges at its Lucknow campus recently. The conference saw top notch bankers delivering their messages on interdependence, integration and co-creation to an audience consisting mostly of bankers along with representatives of infrastructure industry.

Starting the session, K.R. Kamath, CMD of PNB, lauded the country's economic growth and the concurrent role reversal of the Indian corporate sector, aiming to become MNC. Kamath discussed bank strategies and technology-based banking solutions which aim at providing value-addition in customer service. A simple example of the change can be seen in the proliferation of ATMs.

He said current consolidation trends could result in globally active Universal financial service providers co-existing with smaller "niche" players. Instead of growing as universal banks, a move towards Specialized institutions was also emerging mainly as a result of limits to economies of scale and the size of the market, prompted by technological advancements. While flagging issues regarding competition, he said the convergence between banking and insurance posed the difficulty of dual regulation. While RBI regulates the banking arm, the IRDA looks into the insurance operations. Such duality could lead to conflict of interests as well as other related issues. Kamath raised the question: Can consolidated supervision offer a solution? In such a scenario, cross-selling can prove to be a problem. Banks provide relatively simple financial products, whereas insurance products require hard selling. Bank personnel would require honing up their sales and communication skills for banking and insurance converge. On the other hand, technology is redefining the banking business. The development of alternative channels of delivery has reduced the transaction costs and opened up new market segments. This calls for an optimum realignment in the organisational structure and physical presence of footprint of banks in the areas of operation.

The first technical session on infrastructure financing was addressed by Sanjeev Gupta, MD, Nexgen. He said: "No economy could sustain its growth without proper infrastructure sector growth."

According to Gupta, India was no longer witnessing the Hindu rate of growth which was approximately 5-6 per cent. Now India was on the threshold of double digit growth. This rise of India was being watched by the world and the biggest challenge facing India was sustaining this growth rate. This could happen if Infrastructure was being built. He said that the high savings rate had so far protected India in the times of the turmoil and economic crisis. This is the rate which is important for Universal Banking. Our high savings rate of approx. 40 per cent is our biggest advantage which needs to be tapped.

B.K. Batra, ED and Group Head, IDBI Bank analysed infrastructure financing from the bankers' perspective. He said: "It's a key determinant of economic growth and is a necessary condition for growth momentum."

R.K. Chandiok, GM, Power Finance Corporation Ltd (PFCL), Jagannadham T, Head of Research, SMC Capitals and S.P. Arora, MD, IFCI Venture Capital Funds Ltd, gave their views on infrastructure financing. Raman Sidhu, Director, Global Banking, Deutsche Bank pointed out that foreign banks operating in India face problems raising working capital from the Indian Market and need to acquire it from their Head Quarters. Also, many government sectors have problem in expecting securities from these banks.

The theme of the second day was financial inclusion. Basant Seth, CMD of Syndicate Bank, started the day by defining the topic of discussion stating that financial inclusion is the delivery of financial services at an affordable cost to vast sections of disadvantaged and low-income groups.

He said there are various challenges being faced today including viability, scalability, adoption of technology and the use of intermediate agencies. He further talked about the barriers faced by the financial sector such as illiteracy, gender bias, low and irregular income, mandatory requirements of identity documentation as well as product design factors.

Rajeev Rishi, ED, Indian Bank, said financial inclusion is the way towards inclusive growth and pointed out that Indian Bank has taken a lead here and evolved two different models i.e. rural and urban financial inclusion models to take care of requirements of people in the rural and urban areas which differ from each other. The rural model was tried first at Mangalam, a village near Puducherry and the urban model was tried at Dharavi, Mumbai and Asia's largest slum.

Talking about why Indian Bank entered Dharavi in 2005 he said: "The main objective of the study is to obtain a comprehensive knowledge of the performance of SHGs, find out the social and economic benefits and the downsides of SHGs being financed by Indian Bank. The aim is partly to find out what is really happening at group level".

A.K Dutt, Executive Director of Dena Bank, said: "Banks are given target of 72,000 village development and RBI stipulated financial inclusion does not mean opening of no-frill account".

Renu Challu, MD, State Bank Of Hyderabad, said: "For any growth to be sustainable, it has to be inclusive and growth of India and China needs financial inclusion as, with the increase in population, the number of bank branches has also increased". She further talked about the challenges in financial inclusion such as scaling up of activities, high transaction cost, improper cash management, insufficient training and skill development of financial level functionaries and pointed out that an efficient business model is yet to evolve.

She talked about the financial inclusion technology stating POS/KIOSK based smartcard solution with offline operations capability.

(BW Online Bureau)