Banking Sector Reforms in India, Policies and Impacts

5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

Bank of Baroda is one of the leading commercial and retail banks of India, which increasing presence in foreign markets too.The bank holds a strong position in the Indian banking industry and witnessed a Y-o-Y growth of ~20% in its global business. The bank has been making continuous efforts to diversify its business and focus more on the areas like retail, MSME and agriculture credit. The bank holds a strong capital base too, with current Capital Adequacy Ratio standing at 12.28% under the BASEL III norms. The bank also saw a decline in its NPAs, although it is not quite sure that whether this trend is expected to be continued in future as well or not. Moreover, the bank’s management has stated the bank is going through the last phases of its restructuring programs, indicating that the

5. Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.

The financial crisis in 2008 brought about drastic changes in customer behavior all over the world and encouraged customers to take a shifted action towards their needs and wants (Mansoor and Jalal 2011). In the age of globalisation, as no nation can keep itself aloof from the world economic volatility, India too, was affected significantly in economical as well as social dimensions. The economic turmoil had a profound impact on consumers (Flatters and Willmott 2009) and most of the firms including ones in financial sector faced serious challenges in satisfying the customers as they have became more skeptic and cautious. Even though, the Indian banking sector has performed extremely well over the last few years and has shown substantial resilience during the global financial crisis (Das et al 2011), new challenges are seen emerging from customers. The challenges posed are mainly due to changes in customer demands and diffusion in loyalty intentions due to low switching costs. The parameters critical in the imparting customer satisfaction in the banking context, thus demands re-definition and analysis for formulating strategies aimed at competitive advantage. Empirical evidences from studies conducted in various contexts underlines the causal linkage among variables such as perceived service quality and customer satisfaction on loyalty intentions of the customer. However, consumer behavior being complex in nature influenced by environmental changes,

A bank is an institution that facilitates financial transactions between the parties. Amongst its standard operations are accepting deposits from the customers, lending money as loan (cite). The major source of income for banks is interest income which is earned on loans given to the customers, business firms and corporations. This very nature of it makes banking institutions so crucial for economic development of any country. Strong banking operations and fundamentals paves the way for higher customer and investor confidence in the company.

As a result, policymakers, congressmen, local and international organizations, and governments would be able to use this work for the financial and banking reform. At the end, the purpose is bringing some balance between TBTF banks and small and

The global financial crisis has raised many concerns for the need to restructure the approach of risk and regulation in the financial sector (KPMG 2011). Figure. 4 has shown the structures of Basel III. It aims to increase the capital and liquidity of banks and therefore maintaining the stability in banking sector with full effect in 2019 (Banks For International Settlements 2011).

Banking industry plays a very important role in the economic growth of a country. Mergers and Acquisitions have become a positive way for growth in the size of banks which in turn play a significant role in entering the competitive global financial market. The Indian banking sector can be divided into two eras, the pre liberalization era and the post liberalization era. In pre liberalization era government of India nationalized 14 Banks on 19 July 1969 and later on 6 more commercial Banks were nationalized on 15 April 1980. In the year 1993 government merged The New Bank of India and The Punjab National Bank and this was the only merger between nationalized Banks, after that the numbers of nationalized Banks reduced from 20 to

The Basel Committee on Banking Supervision (BCBS) is currently working towards agreement on a comprehensive package of reforms to international capital and liquidity standards by late 2010. These new standards (‘Basel III’) should aim for materially higher levels of capital and liquidity in the banking system.

As a result, policymakers, congressmen, local and international organizations, and governments would be able to use this work for the financial and banking reform. At the end, the purpose is bringing some balance between TBTF banks and small and medium size banks, in a real free market environment.

The banking sector is faced with increasing challenges as the modern day society evolves. In the aftermath of the economic crisis, the population came to become more demanding of the banking sector. In other words, the various categories of stakeholders such as customers, employees, business partners, the public and so on became more vocal and forwarded more demands. The new challenges of the banking sector refer to the operation in a means in which they create benefits for the overall wellbeing of the communities in which they operate.

In the modern scenario India now competes the global world. Company having more challenging and take part to global completion. The Banking conditions in the country are far better to any other country in the world. Banking Industry has also become more powerful in this scenario. It has also many challenges faces to local level to state and national level. Banks Credit and liquidity risk studies suggest that Indian banks are generally elastic. Indian banking industries witnessed adopt innovative banking models like credits (i.e. advances) and small finance banks. RBI’s new measures may helping the restructuring of the domestic banking industry. Banking is the credit creating sector. Contributions of banks to the GDP of a country includes Credit creation, Banks nowadays perform various

This reports deals with Introduction to State bank of India, challenges due to technology, Implementation of CoreBanking System, benefits to SBI, various architecture followed at SBI & talk with MR. ASHOK KUMAR SHARMA (Chief Manager SBI Stressed Assets Resolution Centre).

Also other services like statement enquiry, insurance services, mobile and internet banking etc. are also gaining importance day by day and these have to be looked by the banks seriously.