There is a real shortage of banking entrepreneurs

The worst is substantially over for NPAs as a lot of meritorious restructurings will protect the banks. But 20 to 25 per cent of the restructuring over the last few years are tricky and may have future implications. The overall restructuring number has a downside risk of 20 per cent. Banks must have contingency or capital buffers for 15 to 20 per cent of the restructuring. The next two quarters for growth are important and will be a confidence booster for banks.

The year 2014 will also see the advent of new banks8230;

Two to three licences will give a good signal to the markets. But the biggest risk in banking is the banks ability in execution and project management. Building a bank is very tricky and a scientific business. In my opinion,there is a real shortage of banking entrepreneurs in the country as a lot of bankers have become verticalised in the last 20 years. Also,the regulated licencee must look at it as a primary business and it cant be a side business.

As the head of an industry chamber,what according to you,are the reasons for low investments?

It is a combination of many things much like Murphys Law. A host of issues choked the economy and the situation was particularly rough six months ago. But recent actions have helped industry believe that the government will rectify some of these deficiencies.

Are businesses more optimistic now?

There is a kind of bipolar disorder in the country. While there is still some gloom at the Centre,there is a lot of enthusiasm in the states. But certainly,there is slightly improved business confidence almost like moving from reverse gear to first or second gear.

The last two to two three years were one of the best opportunities India had in the new century. But post quantitative easing,when corrective actions could have been taken,we did not anticipate that we need to build up our forex reserves,check runaway imports like gold,electronics,etc. So we are still grappling with the corrective actions that are required.

What is your view on the Reserve Bank of Indias mid quarterly policy review where it chose to give growth a push?

It is a very calibrated and a relatively bold decision. The easy decision would have been another rate hike,which was anticipated by almost everyone. But the RBI chose to assess the gestationary impact of the last two rate hikes. Earlier,the credit policy was every three months but now it is at every 45 days. But the economy doesnt move as fast as the credit policy frequency.

There is every possibility that some of the inflation will subside on the back of earlier rate hikes. Some of the inflation,which is structural in nature,will resolve when we have growth coming back slowly.

What are Yes Banks plans for 2014?

We have just secured a 150 million loan from the International Finance Corporation,Washington. It is an Aamp;B loan and its end use is for SME financing.

India has a fantastic opportunity in the micro and small and medium enterprises SME space. There is a big vacuum and we are taking steps to become a good bank to the sector.

We believe it is less prone to cyclicality has good collateral and usually promoters protect their businesses well as it is there bread and butter business.

In 2014,we will also take steps to build our retail networks,retail banking as well as agri business.