IEC 2022: Never seen such a clean banking system in the past 50 years, digital startups must be properly assessed: KV Kamath

New Delhi: KV Kamathchairman of the National Bank for Infrastructure and Development Finance, spoke candidly about the Indian banking sector saying that he had not seen the banking system so clean in the last 50 years and today we have a bank that will have a combined market capitalization that puts it at the 7th or 8th most valued bank in the world by market capitalization.

NaBFID President Kamath Thursday while speaking on the Times Network show India Economic Conclave, shared his optimism about the possibility of moving towards a $5 trillion economy. “We are a $3 trillion economy and moving towards a $5 trillion economy. We will enter the top 10 as we probably cross $7 trillion to $10 trillion because it will create opportunity and scale,” he said.

Need to globalize UPI

To achieve this, India must globalize its products, as we have done with software. One of India’s original ideas that Kamath believes can go global is the Unified payment interface (UPI). “It can be extended to all of Europe, because I don’t see anything close there, neither in the United States nor in Africa.”

India’s preparation in terms of the numerical goal will be the main differentiator. Digital technologies and fintech have made this possible, Kamath said in a conversation with Nikunj Dalmia, Editor-in-Chief ET Now. “The democratization of India goes far beyond the political context. Technology has democratized. Today, you can easily afford to have the device in your pocket,” he said.

Sharing further his view on the part of the banking/finance sector he is most passionate about, the NaBFID chief said: “If this conversation had been 6-8 months ago, I would have said the tech sector financial. They come strong. But somewhere, the whole piece of digital technology, there’s a very visible challenge now that’s between the value that’s been created and then there’s an expectation of valuation. There is a disagreement between value and valuation.

Here is the full session:

HDFC-HDFC Bank merger

“This consolidation gives us scale as a nation. We need at least 3-4 banks of this balance sheet size to drive the momentum to $5 trillion. For large incumbent banks, adopting technology is a big challenge,” Kamath pointed out.

He also praised ICICI Bank saying we have a bank that will have a combined market capitalization that puts it as the 7th or 8th most valuable bank in the world by market capitalization.

A big trend in the next 3 to 5 years

In 3 years we will reach 5 trillion dollars and in 7 years it should be around 7-8 trillion dollars. The economy will be strongly oriented towards digital. Over the 3-year and 8-year period, the digital economy is expected to account for 30-35% of the overall economy, Kamath explained.