Banking is big business in India. Just as in other emerging centres like Russia and Brazil and China. But it was in Mumbai, which I visited as part of a series of events arranged by the City of London, that the scale of the industry’s importance in helping countries join the mainstream of international commerce – and how they can improve the lot of their people at home – was brought home to me. When you are fire-fighting at home it is sometimes hard to remember what banks actually do.
I had headed off to India during a strike although flights to Mumbai seemed largely unaffected. As a result, I sailed through a strangely empty Terminal 5 in double-quick time. I’ve never managed to clear security so fast – it was just about one guard per passenger.
It wasn’t such plain sailing when we went out to meet our Indian hosts. The questions I faced were much what I expected – and much what I feared.
Don’t let anyone fool you that domestic politics don’t matter – or that they don’t travel. The proposals of the main parties have been thoroughly picked over in India by friend and competitor alike. I was continually being asked if the UK was really going to break up the large banks, if we were going to tax banks more or go it alone in the face of more limited action from the G20. People wanted to know what all the proposed regulatory change would mean and just how much further the capital ratios of UK banks were going to rise. And if that meant our banks were going to be heading east to make their money.
There is genuine surprise that the political agenda in the UK is propelling Britain along a unilateral route in controlling the business of banking. India has learned our lessons – without having to go through much of the pain. So, while back in the UK politicians from every quarter say public expenditure must be cut and banks constrained to prevent future failure, India is able to sit back and watch what works well before it needs to do anything itself. And it’s not alone; other countries are also waiting to see what will happen in the UK before taking the plunge themselves.
Thus, after a morning of meetings, it was also very forcibly brought to my attention that the subcontinent did not feel it needed to be subject to draconian punishment since – as in Canada – its banks hadn’t got into difficulty. It may have been partly luck and partly a focus on serving local markets that meant international exposure was less than in other, similar-sized economies but it is certainly true that India missed the worst of the global recession – although it has clearly shared the uncertainty.
And the muck is still sticking. It was obvious that, despite a clean bill of health, banks and bankers were as unpopular there as here, with the visceral dog-whistle dislike they engender at home. Maybe the G20 could at least agree on that because the tough talking about global banking reform, so far, seems little more than empty words.
And ‘empty’ is very apt as the void being created leaves room for business to flow out of the UK and for competitors to muscle in. Therefore, it was with great interest that I headed off to ICICI Bank to have a look round the fastest growing non-state bank in India.
There are contrasts everywhere. India’s openness provides access to the trading market but there is still a tendency towards protectionism, with an abundance of state-owned banks and only limited new banking licences each year. But Indian banks can see the opportunities and they are intent on growing in a controlled way as well as rewarding the expectations of their people.
By the way, it is also worth noting the number of women in senior positions in India’s banks – Chanda Kochhar is very impressive as the chief executive at ICICI. I am very pleased she will be coming to London this summer to speak at the BBA’s annual conference.
So, with that to look forward to, I left India – crossing Mumbai, a city full of bustle and enterprise, in one of those three-wheeled taxis. As metaphors go, it couldn’t be more wrong: India is not an economy where the wheels are coming off – it’s keen to grow its huge indigenous local market and to seize the opportunities out there.
The west should watch out…
The BBA’s Annual International Banking conference will take place at Merchant Taylors’ Hall, Threadneedle Street on 13 July 2010; visit bba.org.uk/annualconference for more information.