Stepping Up To The Crease

Finally, V. Vaidyanathan converts his Capital First into a bank through merger with IDFC Bank. But in this new unforgiving banking environment, however, can he strike it big?

- Clifford Alvares

WHEN V. VAIDYANATHAN first stepped into the playing field in the early 90s at Citibank, the banking industry enjoyed an open field at the time. Banking was massively underpenetrated. ICICI and HDFC Bank had just got their licenses. Public sector banks commanded about 95 per cent of the banking business and the huge tailwinds of demographics and under-penetration drove private sector banks to gain market share and dominance.

Even in 2004 when new banking licenses were issued to Yes and Kotak, things were still virgin. Newer private sector banks, with their service orientation and freshly minted branches, were on the road to massive growth in their businesses. Since then over ten new banks have arrived. There are no more easy pickings.

Consider this, in April 2011, for which data is available at the RBI, the total ATM count was a shade over 75,000. There were just six lakh points-of-sale machines, about 1.7 crore outstanding credit cards, and 23 crore outstanding debit cards.

But in the two decades since Vaidyanathan made his debut, banking as a business faces multiple headwinds.

Come 2019, and there are well over two lakh ATMs, more than six times more points-of-sale machines at 36 lakh, 4.32 crore credit cards outstanding, and over 99 crore debit cards. The private sector has weaned away a large chunk of the market and now commands 28 per cent of the total banking assets of $2,358 billion.

In the last few years, the cream of banking customers have already been taken. Some of the more established private sector banks have a huge base and garnered captive customers leading to further growth in assets and liabilities.