Manpower key challenge for Indian banks - McKinsey

MUMBAI (Reuters) - Some of the top Indian banks are capable of making it among the best in the world, but talent development remained a key challenge, consultancy firm McKinsey & Co said.

Indian banking industry has developed strengths in technology and distribution, McKinsey said in a report released on Monday.

Indian banks lag in market capitalisation compared to global peers, but it is a matter of time before this changes as the growth in the country's GDP is helping some of them double market cap every few years, Renny Thomas, Partner with McKinsey, said.

"The capabilities and the market exists," he said, adding the federal government's aim to make banking more accessible to the poor alone would require around 500,000 managers.

The survey was based on findings among 14 banks including 7 state-run and 3 foreign banks, comprising a total of 1,000 respondents. McKinsey did not name the banks.

There are 31,000 rural bank branches in India catering to 600,000 villages and the regulator should look at relaxing branch expansion norms, H.N. Sinor, chief executive of Indian Banks Association, which was also part of the study, said.

The Reserve Bank of India had said it would review the ownership of foreign banks in the country in 2009 and most Indian banks are gearing up for the ensuing competition.

"It won't be a cakewalk for any foreign bank to come and take over the Indian market," Thomas said.