The entry of foreign banks into India came in for a debate on the first day of the two-day bankers' conference that began Wednesday, even as Indian banks sought enhanced overseas presence.
Oriental Bank of Commerce chairman and managing director B D Narang pressed for a more even-handed approach to the issue.
Narang argued that similar liberal regimes for Indian banks should be in existence for their presence in global financial centres, as are being sought by foreign banks in India.
"Not one Indian bank has a license to operate in Paris, London or New York," he said. "East Asian banks are quite open, but only towards Western banks, not Indian banks," he added.
At the pre-inaugural session of BanCon 2004, Reserve Bank of India Governor Y V Reddy argued that the economies of the developed and the developing countries had striking differences.
"Increase of foreign-owned assets in other countries such as Ireland, Spain, Germany have at best been modest," said Reddy, even as he added that the foreign banks in India enjoyed greater freedom and operational profitability.
Anne Krueger, first deputy managing director of the International Monetary Fund, however, argued for more competition via greater presence of foreign banks.
Directed credit allocation has proved to be an expensive experience in countries like Korea, she said.
Krueger felt that as India's integration with the world increased, there will be greater benefits to reap.
The Indian economy has the potential to grow at an annual rate of 10 per cent for a number of years, she felt.
In the afternoon session, State Bank of India chairman A K Purwar pointed out that more than half the revenues of any big global bank come from international operations.
Purwar was confident that the new global bank champions will come from fast-growing regions like Asia.
However, Indian banks must gain in size before looking at world class aspirations, he said.
"Mergers and acquisitions must gain momentum with the emergence of 4-5 world class Indian banks," he said.
He stressed that Indian banks need to retain their domestic bearings even as they push for greater revenues from overseas operations.
The burgeoning knowledge economy is one of the key drivers of growth for India, said K V Kamath, managing director and chief executive officer of ICICI Bank.
Handling remittances from nearly 20 million people of Indian origin around the world and servicing the needs of Indian corporates as they go global may be ways of increasing revenues from overseas, Kamath added.
In the inaugural session of the conference, president A P J Abdul Kalam had said he favoured using part of India's foreign exchange reserves for investment in "high-yield enterprises".
Kalam also urged banks to more than double agricultural credit over the next three years and set up a Rs 10,000 crore (Rs 100 billion) venture capital fund.
The industry also discussed issues of corporate governance in the evening session.
More from rediff