The Issue Of New Bank Licenses

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

The government seems to be preparing the ground for the merger of Public Sector Banks (PSBs). After asking small banks to coordinate with large ones on key areas, it has now merged 19 Regional Rural Banks (RRBs) into eight entities, despite reservations by the Reserve Bank of India (RBI). It plans to merge more rural banks by the end of this financial year. RBI has expressed its displeasure at the move, saying the finance ministry didn't keep it in the loop while going ahead with the mergers. The ministry, however, argued it followed the Regional Rural Banks Act, which didn't mandate consultation with the Central Bank on such mergers. In the second round of consolidation of RRBs, the government has, for the first time, merged RRBs under different sponsor banks. The number of RRBs has been reduced to 71, as against 82 at the end of the last financial year. The government plans to reduce this number to 64 by March-end and to 48

Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Retail banking refers to provision of banking services to individuals and small business where the financial institutions are dealing with large number of low value transactions. This

These banks should ideally be divested of any sort of commercial interest, and must act in the best interest of its nation’s economic stability. A lot of meaning is carried out in being identified as ‘independent’ authority, where the bank possess powers to take its own decisions, approve its own legislature, follow its own policies and offer stability to the nation’s economy.

As I have stated before bank regulations are in place to be the backbone of the U.S. economy. Therefore, we live in a system that affects us every day. Banks have certain requirements and instruments that help them stay open and be profitable. In the 1990s, interstate banking was finally permitted to create nationwide banks of unprecedented size. Congress 's also attempted to force banks to make home loans to people who had limited creditworthiness. These regulations are a major factor in why as many banks failing and disappearing today as we did pre Federal Reserve System.

Banking industry is currently operating in the maturity stage. There are many players as a result of which the competition is quite high. Competition is broadly based on the levels of fees charged, reputation, the range of services and products provided. As the industry consolidates and the range of services broadens, the size and geographic spread of industry players in increasing. Providing a high set of barriers is the capital and regulatory requirements within the banking sector. Entities that want to start up as a commercial bank and/or investment bank or securities dealer face significant establishment costs in order to gain acceptance and meet market reputation. Furthermore, start-ups require up-front expenses in order to establish proper distribution channels. Globalization is high and the trend is increasing. Cross-border sales and acquisitions of banking operations are also occurring, as assets are shuffled in the race to raise capital.

The sector offers a considerable barrier to new entrants due to the high capital required to establish a new bank. As banking is professional services type required high creditability, strong brand presence is the key obstacle for newcomers.

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.

The main goal of the 4 banks is to increase their tangible book value and earnings per share by increasing Net Interest Margin (NIM) via organic growth. There appears to be significant difference in the geographical locations where the global banks see growth and a national bank such as Valley National Bank sees future growth prospects. There is also parity in all 4 banks opinions as to where the fastest growing economic sectors tend to

This article discusses Commonwealth bank having a systemic fraud and systemic theft. They are lying to customers and this is a big impact on the customers. The chairman Mark Bishop is struggling to describe the issue since this is a most trusted financial institution (Ferguson, 2014, para. 1).This articles relates to studies from Chapter 2 where it discusses prudential supervision and the regulation of Commonwealth bank because they are not doing the right thing.

Private banking industry has changed in a very basic way, driven by many key factors such as: free competition systems, modern developments in information technology (in particular, developments of the internet), and changing demographics. Private banks now operate in an environment shaped by increasing and shifting regulations, and in markets influenced by the uncontrolled situations of the world economy and geopolitical issues.

SELDOM CORPORATE India recognizes a PSU (Public Sector Unit) and considers its executives worthy of an award for efficiency and business performance. In the corporate arena, ICICI, HDFC, HSBC etc. are the banks which are always considered for one award or the other. Some PSU banks have won awards in the past but those awards were for achieving computerization and other such ‘achievements’. Seldom has a a PSU bank been seen by corporate India as a potential avenue and as one capable of scaling new heights in the banking industry with the presence of more competitive private banks.

private banking sector in India has seen remarkable growth and now it is one of the significant revenue generators in service sector. The wider impact of Indian private banks has been through increasing competitiveness and customer orientation in the banking sector.. It is, therefore, a challenge for management of private banks to encourage their employees and increase their quality of work life for there healthier performance.

Banking Regulation 1949 is another legislation which governs the functions of RBI. Section 44 A of this Act lays down the procedure for amalgamation of banking companies and also states that bank mergers need to be sanctioned by RBI before taking effect. Among other issues, the Section could probably be the basis of the contentious issues which resulted in the delay of the notification of the whole Competition Act, followed by further delays in the notification of Sections of the Act dealing with mergers.