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The banking industry has gone through a tough phase over the past few years with multiple challenges confronting those associated with it. However, going forward, there appears to be a glimmer of hope at the end of tunnel with the turbulence of the recent past tending to attenuate. The thorny issue of impaired assets is in the process of being tackled. With the quickening pace of corporate stressed asset resolution, and tapering off of fresh bad loan generation, the year 2019-20 in all likelihood should be optimistic for the banking industry. The reduction of impaired assets should release the much needed capital of public sector banks thus augmenting their lending capacity. Further, regulatory oversight of the sector, will no doubt, ensure the requisite discipline for an orderly growth in the market.
The world economy exhibited sluggishness in 2018 in advanced and emerging economies owing to several factors. Principally, increasing trade protectionism and other uncertainties prevailing in the global economy have led to lowering of growth projections by major international agencies for 2019. On the domestic front, the economy has shown signs of moderation in the recent quarters. The Indian economy advanced 6.6 percent year-on-year in the last three months of 2018, below a downwardly revised 7 percent expansion in the previous period and market expectations of 6.9 percent, and as compared to a 7.3 percent growth in Q3 of 2017-18, being the lowest growth rate in five quarters on the back of weak consumer demand. The Brent oil price touched $80/barrel in October 2018 due to supply concerns, impacting India’s current account balance. The Reserve Bank of India in its April 2019 Monetary Policy Statement projected India’s GDP to grow by 7.2% in 2019-20.
While the Indian banking sector has undergone significant reforms over the last few years, there has been a significant increase in competition in the banking industry from the emergence of FinTech companies, payment banks due to technological advancement and tech-savvy human resources. Digitalisation is all around the banking spectrum with the leveraging of big data, increased use of analytics, artificial intelligence, etc. being the order of the day. Our Bank has embraced the technological challenge in the right spirit to enhance operational efficiency and to reduce operating costs while minimizing risk. The objective is to eventually benefit the customers with better services. Our bank is fully conscious of the ever rising customer expectations as technology driven sophistication in the banking environment continues to accelerate.
The issue of Non-performing Assets (NPAs) is a key challenge in the Indian Banking Industry. Banking reforms, particularly the introduction of the Insolvency and Bankruptcy Code (IBC) has created a new hope for resolution of the vexed NPA issue. Initial outcomes from the IBC process are encouraging and we expect resolution of significant NPA accounts through NCLT under IBC during the current financial year 2019-20. We have adopted a multi-pronged strategy to tackle the NPA challenge, and we are confident to make noticeable gains in the same.
We have addressed the issues of due diligence, enhancing knowledge and skills in areas such as Credit, Treasury, Risk Management, IT and Analytics. With Government of India promoting and incentivizing digitalization in a big way, our Bank is also is in alignment with the same strategy. Human resource being a sine-qua-non for any vibrant organization, our bank continues to lay the desired emphasis on its development. I am confident that by focusing our efforts in the key areas, we shall emerge from the difficult times at the earliest and come out of red during the year 2019-20.
With regard to corporate governance, the Board of Directors continuously guides the senior management team of the Bank to help them form business goals and objectives that should help the Bank to move towards a robust and sustainable growth path. The thrust of the corporate governance has always been to maximize stakeholder value by pursuing ethical practices in the conduct of business and maintaining high standards of disclosure and transparency. The Bank has adopted best practices and standards of governance that are monitored by various Committees of the Board.
Finally, I thank customers for choosing us as their preferred service provider notwithstanding other options available to them, and also our stakeholders for their continued support in all our endeavors
With best wishes,
Date: May 22, 2019.