Indian banking system one of world’s best regulated: UBI chief

MV Nair is the Chairman and Managing Director of the Union Bank of India (UBI), one of India’s largest state-run banks. With assets of over USD 13.45 billion, UBI is listed on the Forbes Global 2000 which ranks the top 2000 public companies in the world.

Speaking in an exclusive interview with Indian Link, Mr Nair, who was in Sydney to open the branch office of Union Bank of India, gave full credit to the Reserve Bank of India for the work they did prior to the global financial meltdown in 2007.

“The Reserve Bank of India in 2007 cautioned Indian banks about financing to the real estate market and introduced counter cyclical measures of increasing the risk weightage of the loans. They had envisaged that real estate could be an issue. Therefore, Indian banks were not affected by the credit crunch. In fact, the Indian economy suffered the reverse of the US economy. The credit crunch hit first and then the US economy got affected. In India, due to trade issues, the economy was affected initially, which later put pressure on the credit market,” he said.

He praised the Reserve Bank of India for the way it handled this crisis. “We saw a crisis coming in the mutual fund industry. We called the investment fund industry captains in for a talk. The Reserve Bank gave us a line of credit - we opened this line up and sent out press releases. The confidence came back, and redemption from the mutual funds slowed down. This worked, otherwise it could have begun a bit of a problem,” revealed Mr Nair.

Mr Nair is also very confident about the way the Indian economy is growing. Shrugging off any concerns about China, he explained that India’s growth rate is very robust. “The growth rate has increased from 6% to 8% though it did decline to 5.8% in the third and fourth quarters of last year. However, in the recently concluded quarter it is 7.9%. Yes, inflation is a worry, but the growth is right and some balance may need to happen,” he added.

Elaborating further on the theme of India vis-a-vis China, he is confident that the increase in India’s middle class from the current 350 million to 1 billion by 2039 will create huge ongoing infrastructure opportunities. “India is and will be a great investment destination. If the same investment had come into India as is the case with China, India would not have the capacity to absorb this investment. I would like to have the absorption capacity and the investing coming in. We are moving in the right direction,” he told Indian Link

In spite of China’s growing influence in the world economy, Mr Nair stressed that the US had an extremely important part to play due its great consumption capacity.

Another issue Mr Nair is passionate about in their local communities. “The banking sector is not only about making a profit. As Chairman of Indian Banking Association, my primary engagement is to discuss how to include that 50% of the population who are denied banking opportunities in India,” he said. “If the banking sector does not do that, there may be an undercurrent of social unrest.”

He also explained that the banking system is part of the local economy, and if the local economy does well, the banking system does well. If the local economy does not do well, the banks would suffer.

Mr Nair is excited about the opening of the Sydney branch of Union Bank. The decision taken in 2007 prior to the global financial crisis, has been made possible by his vision.

Mr Utpal Kar who is the supremo of the Sydney operations is also excited about what Union Bank can offer its customers.

“We have the strong desire to give our best for our customers and the Australian office allows us to do just that,” he said.

A traditional lamp was lit and a ribbon cut to inaugurate UBI’s offices in Sydney’s George Street. A gala dinner was held at the Hilton Hotel that evening, at which Mr Nair presented the plans for Union Bank of India to the audience.

“India and Australia have a shared history and language, common democratic traditions, similar legal, financial and government structures and common interests,” said Mr Nair. “The UBI is committed to strengthening the growth of bilateral trade relations between Australia and India”.

He added, “The Representative Office in Sydney will provide necessary consultancy assistance, research and market information, and liaison for the business community in Australia.”

Union Bank joins the ranks of other Indian banks such as State Bank of India and Bank of Baroda their services to the 400,000 plus Indian Australian community.