Jamie Dimon, the 63-yearold chairman and CEO of JP Morgan, the largest of the ‘Big Four’ American banks, is in India to attend a meeting of the global advisory board and also announce a funding initiative with the World Bank for skill development. He took time off from his packed schedule for an interview with TOI. Excerpts:
Territorial fights between central banks and politicians have increased all over the world, including in India. There are people in US suggesting Federal Reserve should become part of the Treasury. In India, we have seen frequent fights over interest rate cuts. Where do you see this fight settling?
I don’t believe there has ever been a President or Prime Minister who wanted higher rates. That conflict has always been there. Most people would agree that central banks need to remain independent. If they are not, it’s hard to protect your currency because political forces tend to do things they should not be doing.
It is perfectly reasonable that governments should look at coordinated policy. It is particularly true today because you have negative interest rates and there is a huge dispute over its long-term effects, whether it’s good or bad.
Is too much emphasis being laid on interest rates and its impact on investment and consumer purchase decisions?
It’s probably true. If you look at the margin on a plant that you are going to build, of all the factors involved, of all the risks, sales, service — interest rate is just one of them. Consumers are very responsive to payments. If income goes up, people tend to spend. So, interest rates coming down for consumers increases their income a teeny little bit.
You have been coming to India for a long time. What are the things that have changed for better and what are the things that still frustrate you and other investors?
In the last 20 years, India’s economy is five times larger than it was. It’s been the fastest growing country on the planet. It has an opportunity to be the fastest growing (economy) for the next 20 years. It has done a terrific job at so many things. But all countries need to do better.
I am here for the skills initiative because we need to train the kids to get the new kinds of jobs at different levels. I am not talking about your engineers but about high school students. It’s true in the US as well. Prime Minister (Narendra) Modi has made tremendous changes — corporate taxation, GST, bankruptcy reforms — and now they are embarking on bank reforms. Those are the things you need — land and regulatory reforms so that you attract capital and companies. That list is not different in other countries.
Are things moving at the right pace?
Business always wants things to move faster. The complexity of some of these things isn’t what you want, it’s tough getting it through government. In the US, we put a man on moon in eight years. On an average, it takes 10 years to get the 49 required permits to rebuild a bridge. Is that a reasonable thing? It’s a disgrace. Governments need to do a better job of evaluating their own performance.
How do you look at JP Morgan’s operations and growth in India and where do you see it five years from now?
When I first came here and went to the Mumbai office, we had one floor. We did research on 20 companies, we had 6,000-7,000 people in the global service centre and a lot of that was a call centre.
Today, we have huge headquarters where we have a huge trading centre, we do research on 130-140 Indian companies, on the economy, on commodities. We bank 50-60 Indian companies in Brazil, the US, London and China and we bank 300 multinationals here. We have a new cash management system. Our global service centre now has 36,000 people. That’s an unbelievable story to tell and that story is going to double in 15 years. We have added commercial banking — it’s small for now but it’s adding more clients over time.
Somehow foreign banks have remained on the fringes in India…
We have $12-billion country exposure — that’s not on the fringe. Each bank has its own expertise. I remember a few years ago I said we wanted to do a few things here but was told we would have to make agricultural loans. We don’t do those kind of loans. We look to bring our value to India. We are not a retail bank. I cannot compete here on retail but that doesn’t mean never, but it will be very hard. If I built a retail system called Chase, I won’t have the benefit of the brand. If I build a hundred branches in Delhi and Mumbai, I will be losing money for 50 years because you have some pretty good banks here already. I need onthe-ground local effort.
It doesn’t mean we can’t do it one day. Maybe one day, we will buy a bank.
‘Don’t want to do business with corrupt’
You recently talked about fear of a recession. How worried are you about the slowdown in large emerging markets such as China and India?
I don’t worry about recessions, but I worry about serving clients in good weather and bad weather. You all know there will be monsoons — that’s part of life. In my life I have seen very few people predict it (recession), they are all guessing. We respond to it. When you say slowdown, China is growing at 5.5%, you guys (India) is 5-6%. Those are not terrible numbers. It is a slowdown, not on the way down.
In India, some of the promoters are facing charges related to corruption. Does this worry you in terms of doing business with Indian businesses?
Obviously, you don’t want to do business with anyone who is corrupt. But you can’t stop doing business with all the people. Many are allegations. It will blow over in time. All over the world we have had this issue, we had Enrons and WorldComs. Sometime, they are just failures. In America, failure is not always considered bad. In many other countries, failure itself is considered corruption. So, you have to distinguish. We have great clients and there are bound to be ups and downs.