While the Indian economy is growing despite geopolitical concerns, there is a need to be cautious and be aware of the risks around, said Amitabh Chaudhry, MD & CEO of Axis Bank, in a fireside chat with Udayan Mukherjee, Global Business Editor, Business Today TV at Banking & Economy Summit oraganised by Business Today in Mumbai’s St Regis Hotel.
“Being a banker, we also need to look at risks all the time. In my mind, we need to add a dose of caution to this feeling of euphoria. And the feeling of caution comes from a couple of factors. All of us have to realize that today we might be making mistakes, which could create problems for banking going forward in the future. So, we have to be very careful about what decisions we are taking today because they will play out five to seven years down the line," the veteran banker said.
There are also a couple of other factors that worries him, from a macro perspective. One is inflation, which is coming under control but given what is happening around the world it could remain sticky for some time. “One of the factors which is, for example, feeding into this is that China has opened up and China will start growing at a pace all over again, there's something to prove to the world. For example, commodity prices are rising again,” Chaudhry explained.
Second is trade war, which has entered into an impasse without knowing the endgame and how long it will take. “When something happens or something flares up, people do a kind of pause and [ask] should I invest or not invest? Things could go haywire. And obviously last factor is China and what China could be doing from a geopolitical perspective. They have ambitions they have stated openly. They don't no longer see themselves as one of the superpowers they want to be treated as one,” said Chaudhry.
On the recent credit growth, he said that deposit growth should go hand in hand to make it sustainable. “Let's be very honest here the growth will be a subset of deposit growth. It can't be even at the same level…I'm not expecting any major impetus to come on the deposit side. In that sense, that is one of the worries. We also have that if deposit growth does not come back. Then the credit growth will get affected because you can't rely on external borrowings to fund that," he added.
On Reliance entering the financial services business, Chaudhry is of the opinion that the game is not easy, but he is worried about the increasing competition.
“It's a large market and everyone can play in that market. The reason you will win is because you're ensuring that you are tracking the right customer…What we've seen is that they play this game of market share and the price points at which they come in attack somewhere in the minds of the customers. So that's one part of the journey. Second part of the journey is when the customer actually comes to you. What is the experience you're providing to the customer so that they say, I've had a great experience with the customer. And let me give you a very stark example, for our mobile app today is rated 4.8 on Google Play Store. It's the highest rated app in the world today … Because all of us doing it, the kind of things you have to put in place to get the first part and the second part right cannot be underestimated...the game is not easy,” said Chaudhry.
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