The economy continued to roll in 2007. So, it was natural that the banking sector, which is an agglomerator and early barometer of economic trends, did reasonably well. But, as the 14th Business Today-KPMG survey of India's Best Banks shows, not every bank was affected equally by the cross currents blowing through the Indian economy. HDFC Bank retains its #1 position in the survey for the fifth year running. That may not surprise too many readers.
But ICICI Bank's decline, from #2 in the previous survey to #9, probably will. Does it mean K.V. Kamath's bank is losing the plot? Not necessarily. It is growing fast, much faster than HDFC Bank, but in doing so, has compromised somewhat, though not alarmingly, on its quality of assets. As a result, it has a net-NPAs-to-advances ratio of 1.02, still reasonable, but not quite as good as HDFC Bank's 0.43 per cent. Basically, it means ICICI Bank is taking slightly more risk to add heft to its balance sheet that it can leverage in future.
The performance of the public sector banks has been the surprise package in this survey. Indian Overseas Bank has clocked in at #3, the highest-ever rank attained by a PSU bank. Then, three such banks figure among the Top 5 banks with the best asset quality, four on the corresponding list of most efficient users of capital and three on the list of best capitalised banks. This shows that public sector banks have embraced the spirit of liberalisation just as enthusiastically as their foreign and private counterparts. Read about this, and other findings of the survey, in our cover package titled India's Best Banks.
Microfinance is now universally recognised as a panacea for poverty. Out of the box thinking is sine qua non for reaching out to the millions of Indians still outside the ambit of traditional banking channels. In Micro-credit Messiahs, we profile eight entrepreneurs, most in their 30s, who gave up cushy jobs to focus on this sector. India needs these, and many more such, people to succeed before it can claim to be a truly egalitarian society.
Elsewhere in the issue, we have a report on how Indian IT companies are turning their focus on the still under-serviced markets of Europe, West Asia and Japan. We also have a feature that, perhaps for the first time, takes a close look at cricket's Indian Premier League-which has already raised $1.75 billion (Rs 7,000 crore) and will kick off in April-and asks a few critical questions regarding its finances.