Piramal said a finance sector professional needs to have highest integrity, deep knowledge of the sector and understanding of technology and also humility to be open to flags of concern being raised by someone
Piramal Finance chairman Ajay Piramal on Friday pitched for a need to change the compensation and incentive structures in the financial services space.
Piramal, whose business interests straddle various sectors, said an executive is rewarded upfront for writing a long-term loan which can also go awry by becoming a non-performing asset in the future. Piramal said a finance sector professional needs to have highest integrity, deep knowledge of the sector and understanding of technology and also humility to be open to flags of concern being raised by someone.
He said the higher cost of funds does not allow the non-bank lender led by him to compete with banks, and hence it has chosen to play in tier-II and III markets where rates are not so important. Piramal said there is a need for more banks to be allowed into the country, pointing out that even though licences have been put on tap by RBI, no single entity has received those since 2015.
The US has 45,000 banks despite having lower population, while India has only 45 banks in comparison, he said, underlining the credit flow will have to grow to achieve ambitions like having a USD 10 trillion economy by 2030.
He also pitched for more NBFCs to be allowed into deposit accepting, and pointed out that there is a freeze on such licences now. The financial sector’s credit growth has to be over 16 per cent for a real GDP growth of 8 per cent, he said, adding that if we as a country are not able to meet growth aspirations, we cannot leverage on the demographic dividend.