November 29, 2016

Half Of PSU Banks Won’t Survive Next Decade; Demonetisation Will Accelerate Failure

There will be only 10-12 public sector banks that can survive the coming disruption, where technology is facilitating the creation of new, lean banks like payments banks at a time when PSU banks are overladen with bad debts and encumbered with excess overheads in terms of brick-and-mortar branches and manpower.

Demonetisation has given a new spur to digital cash and payments, as seen by the huge spike in e-wallet company PayTM’s daily transactions, which have risen three-fold in a matter of days. Yesterday (23 November) we also saw Airtel launch its own payments bank on a pilot basis in Rajasthan, using its own mobile phone network to service customers. It will incur very little additional costs in creating full-fledged branches. Accounts for mobile customers will be opened with a minimum of fuss, with Airtel numbers becoming bank account numbers and eKYC being done electronically. Cash can be transferred free between any two Airtel numbers, and there are 250 million of them.


As Nandan Nilekani, former chairman of Infosys and the man behind the Aadhaar Unique ID, which enables this rapid transformation, noted in a presentation (see the full presentation here), the banking industry is set for 12 disruptions. At least six of them are major ones, for which some of the weaker PSU banks are simply unprepared.


1 comment:

  1. Great threat also comes with great opportunity ,
    Currently PSU bank at slow decision making if it stay like this,
    It may got vanish,
    As done in BOB, TOP management appointment from outside bank ( Talent is qualification), other also need to search talent at top level..