INSUBCONTINENT EXCLUSIVE:
Gautam Chhugani, who was recently in the news for being the lone bear on ICICI Bank stock, has said that “juicy” fee income charged for
the loans offered have been ailing Indian lenders.
India has a distinct corporate landscape with promoter/owner managed organisations, as
the lending practices in corporate banks have been based on relationships, the analyst at investment firm Bernstein told ETCFO in an email
interview.
“The fee income charged by the bankers for loans was extremely juicy and they added straight to the bottom-line
Good bottom-line translates to life changing ESOPs and bonuses, so bankers don't know where to draw the line on prudence,” said
Chhugani.
Click here for full interview“Therefore, in private sector, the problem is of unchecked personal ambitions,” he
added.
Bloomberg had recently reported that among the 54 ICICI analysts tracked it, Bernstein's Gautam Chhugani was the only one who
believes India's second-largest private sector bank is a sell.
“The government needs to clearly work on incentive structures within
state-owned banks for the top leadership as well as across the organisation,” believes Chhugani.
On future of technology in banks,
Chhugani said payments business is gone almost completely fintech.
“UPI, Paytm and other tech players such as WhatsApp and Amazon will
take the juice out of payments business,” he added.
Chhugani also sees cryptocurrencies impacting operations of international money
transfer, equity and bond markets and other global consensus protocols.
“Blockchain as a technology will affect banking but
cryptocurrencies, in my view, would cause long term business model alteration,” he said.
