'We`ve decades of growth ahead'- The Economic Times

February 01, 2010

ET Chats With ICICI Bank Chief Kochhar On The Future Of Banking

Sudeshna Sen DAVOS

FOR Chanda Kochhar, as an Indian bank chairman in a place where banker bashing is quickly overtaking skiing as the most popular sport, it’s easy to smile. We trip over at least a 100 global celebs to sit in the crowded conference centre, because she’s been tucked away in this super secret governors meeting for some time — a background event where bank chiefs from around the world sit and swap stories in private — and now she wants to attend some general sessions. Even at Davos, there are levels and levels — and Ms Kochhar moves in circles where oxygen should be mandatory. She talks about how she sees the future of banking, the emerging shape of the global economy, and what the implications are for India and the banking sector.

So, what’s the future looking like?
I think, one of the key issues facing the world today is that it is not very clear what will happen. There is recovery, but how this recovery will convert into growth is the biggest challenge for developed economies. One thing that is coming out clearly though is that the new world will be very different. The western economies, which were dependent on consuming and borrowing, are still not clear where the next growth drivers are going to come from. Even after a recovery, growth will be relative — in absolute terms, we’re not going to see a return to the kind of levels we saw before the recession. I think it will take some time before the “new normal” state is achieved. India, of course, is a different story — our growth drivers are completely different.

'Over-regulation is a big worry'

Publication : The Economic Times                   Date: February 1, 2010

Edition : All                                                       Page: 16

 
FIRST there is this huge consumption gap, and with a young population constantly coming into the workforce, I think we have decades of growth opportunities before we have to worry.

What should we worry about in global banking and government’s getting tough?
Again in India, the banking system, which is the heart of the system, has not collapsed. Our policies have been conservative and sensible. We have not financed asset bubbles. If you look at the discussions here about Tier 1 capital, our definition has always been equity, we’ve always had to maintain liquidity reserves. The big worry in the discussions that I am seeing is the fear of over-regulation. It isn’t a good thing if supervision and regulation is tightened driven by populism — regulation should not go so far so as to stop growth. I don’t think it will affect the regulatory environment in India. I see no signs of any concern as far as domestic innovation is concerned, like mobile banking etc.

Do the global banks know what they’re doing or are they still on another planet? What about those toxic assets?
I get the sense that banks are aware of what is happening. They have taken on board the popular concerns and the criticism, and are making changes to the compensation system. See, in India, for instance, our compensation system is linked to a company’s performance, not individual, and anyway most are spread out over time. About toxic assets, yes, there is a lot more clarity now then there was earlier about those.

When do you think Indian government should withdraw stimulus measures?
Some of these measures are already in the system, and can’t be withdrawn — for instance, the 6th Pay Commission. RBI has to follow a balanced approach to maintain growth.