Reinvention, not overhaul, is key to evolution: Pvt bank chiefs

The Indian banking sector finds itself in a curious position. Financial metrics — profits, balance sheet strength, and nonperforming assets - are all at their best levels in years.

- BS REPORTER

Yet, this good news is tempered by a persistent lack of credit demand from large corporates and a plateauing of demand from the retail segment.

At the Business Standard BFSI Insight Summit 2025, a session titled 'Is it time to revisit the banking model?' — moderated by Vikas Dhoot of Business Standard — brought together top bankers to discuss how the industry must adapt to this evolving landscape.

Bankers agreed that the opening up of acquisition financing has created a new avenue for growth and a fresh profit pool for the Indian banking sector. This, in turn, has sparked calls for a reinvention of India's traditional banking model, which has long relied on corporate loans, project finance, and retail credit to drive asset growth. However, banking heads at the summit emphasised that reinvention is a continuous process and that the industry constantly adapts to the evolving external environment.

They also pointed out that lending is just one of many activities banks engage in, and they have several other levers to grow their net interest income (NII).

"It's not that companies have stopped borrowing from banks altogether. In recent quarters, we've seen new opportunities in loans to middle-market corporates and small and medium enterprises (SMEs)," said Prashant Kumar, managing director (MD) and chief executive officer (CEO) of Yes Bank, speaking at the panel.