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The Rediff Business Interview / Rana Talwar

'India needs to get a sense of urgency to liberalise further'

Rana Talwar is an Indian who has scaled the great heights of banking. Today, this St Stephen's graduate is the Standard Chartered Bank group chief executive, one of the first Indians to reach the top posts of an international bank. In Jaipur to attend the Confederation of Indian Industry's Partnership Summit, Talwar spoke to Amberish K Diwanji about the difficulties facing India.

Where does India stand today vis-à-vis liberalisation?

India today is at the crossroads. It has achieved a lot, but in some ways it still has a long way to go in many other directions. Given India's potential in resources, including human, it can unleash all this on the world and charge ahead. But a lot depends on implementation and the adoption of correct policies. It really depends upon the country now to decide whether it wants to take this path or still struggle along and then 25 years later say 'We missed the boat'.

Do you think wrong policies were followed?

No, I don't think the policies are wrong but certainly we are weak on implementation. Often commitments made are not met, though I won't go into specific cases. Yet, one must remember that restructuring is a difficult process and both business and government must learn from them.

Do you think the level of investment flows has decreased?

One must remember that today, India is competing for capital. Business will invest where it gets the best rate of returns. Now India is viewed as potentially attractive, especially in the long term. But certain policies and the process of implementation make it not so attractive in the short term.

For instance, there is too much bureaucracy, policies are changed too often, and then money has to constantly change hands for things to get done. Businesspeople come here to make profits, not to lose. In the short term, India does face a lot of impediments.

Do you think the nuclear explosions have hurt investment?

I would not like to comment on the country's foreign or defence policy. But the nuclear tests were not viewed abroad favourably. It has affected trade, investment and confidence and the country must deal with restoring the lost confidence.

What needs to be done on a priority basis?

Some right decisions need to be taken. The country needs a transparent policy on investments, regardless of where it comes from, an open playing field for all players national and international, reduce bureaucracy and licences. Indian businesses will have to restructure themselves for increased global competition and accept that some of them will lose out.

Indian government and business must realise that more competition will hurt some businesses. Certainly some individual units will lose out, but it is important to remember that one cannot go on protecting individual units, rather it must help the economy grow even if some units are hurt in the process.

The government needs a system to help businesses restructure, provide a safety net for those who suffer. But remember, restructuring will help the country's economy and people in the long run.

Where the macro policy is good, investment will flow.

What effect will the euro have?

I think the euro's effect will be minimal. For a few years, the euro will run parallel along with the national currencies, and therefore won't have a significant impact on India. It will, of course, have a major impact in Europe. However, I am not really in a position to speak authoritatively on the micro-level aspect, for that you will have to contact my treasury department.

With southeast Asia bouncing back, do you think India has missed the boat on liberalising?

Southeast Asia is bouncing back but I don't think India missed the boat. Still, India needs to get a sense of urgency to liberalise further and make its market more attractive for investors.

Banks have of late been reluctant to give credit, fearing losses and increasing non-performing assets.

Standard Chartered has a clear credit policy and any industry meeting those guidelines will be given credit. Banks must understand that their job is to manage risks, not avoid them. Still, India needs some progress on credit policy and Indian banks would do well to tackle their problems rather than postpone facing them.

Do you think conferences such as the current one serve any purpose? After all, out here you are preaching liberalisation to the converted.

I agree that talk of liberalisation must go beyond business to the people. Yet, conferences such as these do have a purpose in getting across to people who may have doubts about liberalisation, to convince those who are wavering. It is a place where businessmen can communicate with one another and share their views, especially with those who are still somewhat hesitant about liberalisation.

Indian business seems extremely reluctant to professionalise. Till today, the best way to rise to the top ranks is to share the same surname, or better to be a close relative of the top man.

I agree that this habit continues within India, but it cannot do so for long. Too many businesses that have failed to professionalise have suffered losses whereas those that have moved with the times are prospering. That has been the case worldwide, there is no reason why India will be different. Indian business will have a chance of succeeding globally if they professionalise.

Still, today you as an Indian could become the top person in an international bank because it believed in professionals. Would you have done just as well in a family-owned Indian company?

( Laughs) That is very difficult to say. It always is. One doesn't know what life would have had in store if I had chosen another career or stayed on in India. But I get your point and I guess the best answer to whether I would have done just as well is probably not.

What are Standard Chartered's plans for India?

Standard Chartered was originally the Chartered Bank of India, Singapore and China. We have been in India since 1853. We have added business of 125 million pounds in the last four to five years. We would like to be imbedded in India rather than be seen as a foreign bank. Certainly we are not State Bank of India, but we have a commitment to the country.

I also feel that the future lies in retail banking. While Standard Chartered does have good corporate and treasury departments, it is retail that will bring in future business, in areas such as credit card, deposit mobilisation, customer oriented services, etc. We are determined to become more effective.

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