How many of you know what is the Wimbledon effect?

It is a tennis tournament played in England. The crowds come from all parts of the world, but is largely English. The ball boys, girls, commentators etc. are mostly English (well well these days things are changing!), but one thing is certain, the winner is NEVER an Englishman. That too is tradition!

Why am I talking about that here?

Because we have a whole industry which is increasingly being dominated by the foreign shareholder….any guesses?

Well it is banking..! Except for a fiction that Hdfc bank, Icici bank, etc are registered here, they are foreign banks. The Psu banks are busy doing what their political masters are telling them. Bankers in India have one of the highest margins in the WORLD. Make no mistake – top customers pay 12%, smes pay 15%, retail borrowers pay 16 to 22%. Then of course the credit card guys pay about 40%….not bad.

Now if the regulator does not allow foreign banks, why does he allow Indian banks to be held by FIIs? Well, we cannot ask such questions, right?

Banking has always been profitable because of one important thing….when banks fail, they get bailed out. Banks are financed by the governments  – remember when Global Trust Bank failed, the deposit holders got compensated in FULL by the RBI? It just got merged with a bigger successful psu bank!

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  1. Subra Sir,

    What do you mean by stating that banks like icici, hdfc are foreign? Could you shed more light on that?

  2. So Subra,
    Based on your knowledge, you also know what happened to GTB shareholders when it got merged with OBC.
    I hope you can sleep well at night knowing what will happen to HDFC shareholders if it has to be ‘bailed out’ Indian style!

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