Subject:-

Management of financial institution and services

Prepared by:-
Soni Dhaval R. (56)

Submitted to:-
Prof. Mr. Lalit Tank

1
 Index
No. Topic Page
No.
1. Banking Financial Institute in India 3
Structure of banking in India 4
Commercial Bank 5
- Function of commercial bank
- Role of commercial banks in economy
development
Foreign Bank 18
Co-operative Banks 21
2. Future Opportunities for Financial Services and
Sector in India? 26
3 Bibliography 30

2
 1] Banking financial institutes in India

Banking in India
Banking in India originated in the first decade of 18th century. The first banks
were The General Bank of India, which started in 1786, and Bank of Hindustan.
The oldest bank in existence in India is the State Bank of India, which originated in
the "The Bank of Bengal" in Calcutta in June 1806.After India's independence in
1947, the Reserve Bank was nationalized and given broader powers.

History
The first fully Indian owned bank was the Allahabad Bank, established in 1865.
Promoters opened banks banks to finance trading in Indian cotton. With large
exposure to speculative ventures, most of the banks opened in India during that
period failed. The depositors lost money and lost interest in keeping deposits with
banks. Subsequently, banking in India remained the exclusive domain of
Europeans for next several decades until the beginning of the 20th century. .
Indians had established small banks, most of which served particular ethnic and
religious communities.

Current situation
Banking in India is generally fairly mature in terms of supply, product range and
reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian
banks are considered to have clean, strong and transparent balance sheets relative
to other banks in comparable economies in its region. The Reserve Bank of India is
an autonomous body, with minimal pressure from the government

Currently,

88 scheduled commercial banks (SCBs)

27 public sector banks,

29 private banks
3
 Structure of banking in India

Reserve bank
of India

Scheduled Non scheduled

banks banks

Scheduled Scheduled
commercial cooperative
banks banks

Public Private Foreign Regional Scheduled Scheduled

sector bank banks banks urban state
banks

Nationalize SBI and its Old private New private

bank associates sector bank Sector bank

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A] Commercial Bank:-
The act of borrowing and landing and there by the creation of credit is a special
type of exchange transaction which involves future payment of the principal sum
borrowed as well as the rate of interest on it.

Different credit institution lends money for different purposes and is collectively
called the financial system.

Function of commercial bank

a] Accepting Deposits
The bank borrows in the form of the deposits. This function is important because
banks mainly depend on the funds deposited with them by the public. The deposit
received by the banks may be of the following types.

i] Demand or current account deposit:

If a deposits money in the bank in the current account, he can withdraw it in part or
in full at any time he likes without notice. These accounts are generally kept by
businessman whose requirements of making business payment are quite uncertain.
Usually no interest is paid on them because bank can not utilize these short-term
deposit and must keep almost cent percent received again them.

ii] Fixed deposit or time deposit:

These deposits are made for a fixed period of time, which varies from fifteen days
to a few years. These deposit cannot be withdraw before the expiry of that period.
However, a loan can be taken from the against the security of this deposits within
the period. A higher rate of interest is paid on the fixed deposit carry a good rate of
interest they are good source of investment by the people who are in a position to
save.

iii] Saving bank deposit:

in this case the depositor can withdraw the case usually once a week. Sometimes
there are also restrictions as to the total amount that can be withdrawn at one time
and the total amount that can be place in one deposit. These deposits are generally

5
made by the people of small means, usually, people with fixed salaries, for holding
their short-term saving. Like the current account deposits, the saving bank deposits
are payable on demand and also they can be drawn upon through cheques. But in
order to discourage people to use the saving bank deposits very frequently, there
are some restrictions on the number of times withdrawn that can be made from this
account.

b] Advancing loan
Another function of the bank is to give the loans to others. If the bank does not
lend the deposited money to others, how can it pay the interest on the deposit to
depository?

Banks give loan to businessmen and firms usually for short period only. This is so
because the bank must keep itself ready to meet the demand of the people who
have deposited money for short period only.

The bank must strike a fine balance between liquidity and profitability.

i] By allowing an overdraft:
Those people who keep current account with the bank are sometimes given the
right to over draft their account. In other words; people make arrangements with
banks that if a cheque has been drawn by them which is not covered by the deposit,
then the bank should grant the overdraft and honor the cheque. Thus under
overdraft arrangement people can get more than they have deposited but they have
to pay interest on the extra amount which has to be paid back with in a short
period.

ii] Loans by creating a deposit:

The bank advances money not only in the form of overdraft but also in the form of
loan given by creating a deposit. When a businessman wants to gat a loan from the
bank he has to satisfy the manager about his ability to pay, the soundness of his
venture. It will be seen that when the loan has been granted a deposit has been
created. That is why it is said that in modern time “every bank credit creates a
deposit or that, deposit of cash have changed into deposit of credit”.

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c] Discounting bills of exchange or Hun dies
A very important function of a modern bank is to discount bills or hundies of
businessman. It is like this. A businessman buys goods and is granted credit say,
for a month. The seller of the goods drew bills of exchange which the purchaser is
asked to sign. The bill order the purchaser to pay a certain sum after the expiry of
one month if the seller goes on selling goods on this basis, he will soon find that all
his stock is gone and he has got only these hundies in his cash box, unless these
hundies are changed into cash his business will come to a standstill. He therefore
does not keep these hundies which him till they mature for payment. But he take
them to the bank and get the present wort of the hundies leaving the bank to realize
them when the date of payment comes. This called discounting a bill it is obvious
that has advanced money to the businessmen for the period of the currency of the
bill.

d] Transfer of money

Banks transfer money from one place to another place for their customers banks
remit the funds of the people by means of a bank draft or a cheque. This is a cheap
as well as safe method of transferring money from one place to another.

e] Miscellaneous functions
A bank now days serve its customers in various other ways. It has ‘safe deposit
vaults’ which are also called lockers. They are meant to keep the valuables of
customers as well as pays dividends on behalf of Joint Stock Companies. It
purchases and sells stock and shares of companies for its clients. It pays insurance
premium on behalf of their customers from their deposits. It executes the wills of
deceased customers and acts for them as a trustee.

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 Role of commercial banks in economy development
The rate of capital formation in turn depends on the rate of savings. and investment
and proper allocation of investible funds among different sectors and user.

a] promotion of saving:
People save for various reasons. Thus people save to provide for future needs, such
as period of unemployment, old age, sickness, to provide for education and
marriage their children, to own property such as real estate, houses etc. in future ,
and to purchase durable consumer goods. But they require assets in the form of
which they should keep their saving in safe custody and earn a rate of return as
well. Commercial banks promote saving by providing a wide range of deposits
with varying combinations of liquidity and rate of interest of suit the needs and
preferences of different saver. It has been found that with the growth of
commercial banking in unbanked and under-banked regions, the house hold saving
go up. As a store of value, bank deposits enjoy certain advantages over tangible
assets and other financial assets. This underlines the importance of keeping price
stable, if saving by house hold is to be promoted.

b] Mobilization of savings
Not only do the banks encourage savings but they also mobilize savings done by
several households and make them available for production and investment to the
entrepreneurs various sectors of the economy. This function of mobilizing savings
is of crucial important because in the modern monetary economy, the act of saving
has been separated from: real investment. Savings are done by millions of
households and firms, who are individual saving, may be very small, savings of
some may be of short-term and of others of long-term nature. Banks and other
financial intermediaries collect or mobilize these savings before these can be made
available to the producers or investors. Without the banks these savings would have
remained scattered and also idle, that is, would not have been utilized for productive
and investment purposes.

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c] Allocation of fund
Allocation of funds or economic surplus among different sectors, users and
producers so as to make maximum social return and thus to ensure optimum
utilization of savings is an other important function performed by the banks.
Whereas the corporate firms can raise resources through sale of equity shares
and debentures, the non corporate firms and borrowers depend great ly on banks
for financing the needs of both working capital and fixed capital. Through the
landing rates of interest determined by market mechanism or fixed by the Central
Bank of the country credit advanced by the banks get rationed among various
potential borrowers and sectors. Further. Before lending banks take into account
the credit-worthiness or capacity to pay back the leans. Thus the banks are in a
better position to judge the returns or productivity from the uses for which the
funds are lent out. This helps in maximization of returns from scarce financial
resources. However, it may be mentioned, that commercial banks do not always
work and allocate resources in the way that maximizes production or social welfare.

d] Promotion of trade, production and investment

By encouraging inducement to save and also mobilizing savings from the public.
Banks to increase the aggregate rate of investment in the economy. It may also
be noted that bank not only mobilize the saved funds from the public, but also
themselves create deposits or credit which serve as money. The new deposits are
created by the banks when they lend money to the investors or other users. These
deposits are created by the banks in excess of the cash reserve they obtain
through deposits by the public. These days, the bank deposits, especially demand
deposits, are as much good money as the currency issued by the Government or
Reserve bank of India. This creation of credit, if it is used for productive
purposes, greatly enlarges production and investment and thus promotes
economic growth.

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Name of the commercial banks are given below:-
1] United Bank of India (UBI)
Founded 1950, India
Headquarters Kolkata
Key people P.K Gupta, Chairman & MD
Industry Financial Commercial banks

2] Reserve Bank of India (RBI)

Founded April 1, 1935
Headquarters Mumbai, India
Governor Dr. Duvvuri Subbarao
Central Bank of India

3] Allahabad Bank

Founded April 24, 1865

Headquarters Kolkata
Key people K.R. Kamath Chairman & MD
Industry Financial Commercial banks

4] Andhra Bank
Founded November 20,1923
Headquarters Hyderabad
Key people K Ramakrishnan (CMD)
Industry Financial
Products Private Banking

5] Bank of Baroda
Founded July 20, 1908
Headquarters Mumbai, India
Key people M D Mallya, Chairman & MD
Industry Banking, Capital Markets and allied indus.

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6] Bank of Maharashtra (BoM)

Founded 16th September, 1935

Headquarters Mumbai, India
Key people Government of India
Industry Financial Commercial banks

7] Canara Bank
Founded Canara Bank Hindu Permanent Fund (1906)
Canara Bank Ltd (1910)
Canara Bank (1969)
Headquarters Bangalore, India
Key people A C Mahajan, Chairman & Managing
Director, D L Rawal, Executive Director
G S Vedi, Executive Director.
Industry Financial Commercial banks

8] Central Bank of India

Founded 1911
Headquarters Mumbai, India
Key people Ms. Homi. A. Daruwala,Chairman & MD
Industry Financial Commercial banks

9] Corporation Bank
Founded Udipi, 1906
Headquarters Mangalore, India
Key people B. Sambamurthy, Chairman
Industry Banking

10] Dena Bank

Founded 26th May, 1938
Headquarters Mumbai, India
Key people Shri. P. L. GAIROLA Chairman & MD
Industry Commercial Banking

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11] Indian Bank
Founded 1907
Headquarters Chennai, India
Key people Mr. M.S.Sundara Rajan (Chairman and MD)
Industry Banking

12] Indian Overseas Bank ( IOB )

Founded Madras, February 10, 1937
Headquarters Chennai, India
Key people Chairman & MD S A Bhat
Industry Banking Capital Markets

13] Oriental Bank of Commerce

Founded 19th February, 1943, in Lahore
Headquarters Pakistan

14] Punjab and Sind Bank

Founded 1908
Headquarters New Delhi.

15] Punjab National Bank

Founded Lahore, 1895 (British India)
Headquarters New Delhi, India
Key people Dr. K.C. Chakrabarty Chairman and M.D.
Industry Banking Insurance Capital Markets

16] Syndicate Bank

Founded Udupi, 1925 (as Canara Industrial and Banking
Syndicate Limited)
Headquarters Manipal, Karnataka State, India
Key people George Joseph, Chairman & M.D.
Industry Banking, Insurance, Capital Markets

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17] Union Bank of India (UBI)
Headquarters Mumbai, India
Key people Mavila Vishwanathan Nair Chairman &MD
Industry Financial Commercial banks

18] UCO Bank

Founded 1943
Headquarters Kolkata
Key people Shri S.K. Goel Chairman & MD
Industry Financial commercial bank

19] Vijaya Bank

Founded 1931 at Mangalore, India.

Headquarters Bangalore, India
Key people Albert Tauro, Chairman & M.D.
Industry Financial Commercial banks

20] IDBI Bank

Founded 1964
Headquarters India
Key people Yogesh Agarwal — Chairman
Industry Finance

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 B] Private Banks in India
1] Axis Bank

Founded 1994, India.

Headquarters India
Key people P.J. Nayak, Chairman & CEO
Industry Financial Commercial banks

2] Bank of Rajasthan

Founded Udaipur in 1943

Headquarters Jaipur
Key people R.K.Jain
Industry Private Banking

3] Bharat Overseas Bank Ltd

Headquarters Chennai,
Key people Indian overseas bank

4] Catholic Syrian Bank

Founded 26th November 1920 at Thrissur

Headquarters Thrissur, India
Key people Shri.R.Venkataraman , Chairman
Industry Financial Commercial banks

5] Centurion Bank of Punjab

Founded Panaji, 1994

Headquarters Mumbai, India
Key people Mr. Rana Talwar, Chairman
Industry Banking Insurance Capital Markets

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6] City Union Bank

Founded 31st October1904

Headquarters Tamil Nadu, India
Key people Shri. S. Balasubramanian, Chairman
Industry Private Banking

7] Development Credit Bank

8] Dhanalakshmi Bank
Founded 14th November 1927
Headquarters Thrissur , Kerela, India
Key people Sri Ghyanendra Nath Bajpai as Chairman , Sri
P.S.Prasad as Managing Director & CEO.

9] Federal Bank
10] Ganesh Bank of Kurundwad

11] HDFC Bank

Founded August, 1994

Headquarters Mumbai, India
Key people Mr. Aditya Purii, MD
Industry Banking, Insurance, Capital Markets.

12] ICICI Bank (Industrial Credit and Investment Corporation of India)

Founded 1955
Headquarters Mumbai, India
Key people N Vaghul, K.V.Kamath, Chanda Kochhar,
Kalpana Morparia, V Vaidyanathan, Madhabi Puri
Loans, Credit Cards, Savings, Investment vehicles,
Industry Insurance

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13] Indusind Bank

Founded 1994
Headquarters Mumbai, India
Key people Mr. R. Seshasayee MD
Industry Private Bank

14] ING Vysya Bank

Founded 1930,India.
Headquarters India
Key people Vaughn Richtor, MD & CEO
K.R Ramamoorthy, Non-Executive Part-time
Chairman
Industry Financial Commercial banks

15] Jammu & Kashmir Bank

Founded 1938
Headquarters India
Industry Financial industries

16] Karnataka Bank

Founded February 18th, 1924

Headquarters Kodialbail, India
Key people Shri Ananthakrishna, Chairman & CEO

17] Karur Vysya Bank

Founded 1916
Headquarters Karur, Tamil Nadu, India
Key people P. T. Kuppuswamy Group Chairman
Industry Banking.

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18] Kotak Mahindra Bank
Founded 1985 (as Kotak Mahindra Finance Ltd)
Headquarters Mumbai, India
Key people Mr. K.M. Gherda, Mr. Uday Kotak, Dr. Shankar
Acharya
Industry Banking

19] Lakshmi Vilas Bank

20] Nainital Bank

21] Ratnakar Bank

22] SBI Commercial and International Bank

23] South Indian Bank

24] Amazing Mercantile Bank

25] Yes Bank

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 C] Foreign Bank
Foreign banking in India

In India Development financial institutions and refinancing institutions were

meeting specific sectoral needs and also providing long-term resources at
concessional terms, while the commercial banks in general, by and large, confined
themselves to the core banking functions of accepting deposits and providing
working capital finance to industry, trade and agriculture. Consequent to the
liberalization and deregulation of financial sector, there has been blurring of
distinction between the commercial banking and investment banking.

Reserve Bank of India constituted on December 8, 1997, a Working Group under

the Chairmanship of Shri S.H. Khan to bring about greater clarity in the respective
roles of banks and financial institutions for greater harmonization of facilities and
obligations. Also report of the Committee on Banking Sector Reforms or
Narasimham Committee (NC) has major bearing on the issues considered by the
Khan Working Group.

The issue of universal banking resurfaced in Year 2000, when ICICI gave a
presentation to RBI to discuss the time frame and possible options for transforming
itself into an universal bank. Reserve Bank of India also spelt out to Parliamentary
Standing Committee on Finance, its proposed policy for universal banking,
including a case-by-case approach towards allowing domestic financial institutions
to become universal banks.

Now RBI has asked FIs, which are interested to convert itself into a universal
bank, to submit their plans for transition to a universal bank for consideration and
further discussions. FIs need to formulate a road map for the transition path and
strategy for smooth conversion into an universal bank over a specified time frame.
The plan should specifically provide for full compliance with prudential norms as
applicable to banks over the proposed period.

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Following are the list of the Foreign Bank

1] ABN- AMRO Bank

Founded 1991
Headquarters Amsterdam, Netherlands
Key people Mark Fisher (CEO)
Industry Financial services

2] Barclays Bank

Founded 1690
Headquarters London, England, UK
Key people Marcus Agius, Chairman
John Varley, Chief Executive
Robert Diamond, President
Industry Banking

3] Citibank

Founded 1812
Headquarters New York City, New York
Key people Vikram Pandit — CEO,
Gary Crittenden CFO,
John Ferderson — COOS.
William R. Rhodes — Chairman
Industry Finance

4] HSBC

Founded Hong Kong (1865)

Headquarters London, England, UK
Key people Stephen Green, Group Chairman
Michael Geoghegan, Group Chief Executive
Industry Finance and insurance

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5] Standard Chartered Bank

Founded 1853
Headquarters London, England, UK
Key people E.Mervyn Davies CBE, Chairman
Peter Sands, Chief Executive
Industry Banking

6] Deutsche Bank

Founded 1870
Headquarters Frankfurt am Main, Germany
Key people Josef Ackermann, Chief Executive Officer and
Chairman of the Management Board
Industry Finance and insurance

7] Abu Dhabi Commercial Bank Ltd

Headquarters Mumbai, India

Key people Bahri & Mazroei Group Chairman & Managing
Director
Industry Banking

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 D] Co-operative Banks

Cooperative Banks in India

The Co operative banks in India started functioning almost 100 years ago. The
Cooperative bank is an important constituent of the Indian Financial System,
judging by the role assigned to co operative, the expectations the co operative is
supposed to fulfill, their number, and the number of offices the cooperative bank
operate. Though the co operative movement originated in the West, but the
importance of such banks have assumed in India is rarely paralleled anywhere else
in the world. The cooperative banks in India play an important role even today in
rural financing. The business of cooperative bank in the urban areas also has
increased phenomenally in recent years due to the sharp increase in the number of
primary co-operative banks.

Co operative Banks in India are registered under the Co-operative Societies Act.
The cooperative bank is also regulated by the RBI. They are governed by the
Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act,
1965.

Cooperative banks in India finance rural areas under:

 Farming
 Cattle
 Milk
 Personal finance

Cooperative banks in India finance urban areas under:

 Self-employment
 Industries
 Small scale units
 Home finance
 Consumer finance
 Personal finance

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Some facts about Cooperative banks in India

 Some cooperative banks in India are more forward than many of the state
and private sector banks.

 According to NAFCUB the total deposits & lendings of Cooperative Banks

in India is much more than Old Private Sector Banks & also the New Private
Sector Banks.

 This exponential growth of Co operative Banks in India is attributed mainly

to their much better local reach, personal interaction with customers, and
their ability to catch the nerve of the local clientele.

In States

Andhra Pradesh

1. The Adilabad District Central Co-operative Bank Ltd.

2. The Anantapur District Central Co-operative Bank Ltd.

3. Chittoor District Co-operative Bank Ltd.

4. Cuddapah District Central Co-operative Bank Ltd.

5. Eluru District Central Co-operative Bank Ltd.

6. Guntur District Co-operative Bank Ltd.

7. Hyderabad District Central Co-operative Bank Ltd.

8. Kakinada Co-operative Central Bank Ltd.

9. Karimnagar District co-operative Bank Ltd.

10. Khammam District Co-operative Central Bank Ltd.

11. Krishna District Co-operative Central Bank Ltd.

Arunachal Pradesh

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The Arunachal Pradesh State co-operative Apex Bank Ltd.

Assam

The Assam Co-operative Apex Bank Ltd.

Bihar

The Bihar State Co-Operative Bank Ltd.

 Arrah-Buxer District Central Co-operative Bank Ltd.

 Aurangabad District Co-operative Bank Ltd.
 Begusarai District Central Co-operative Bank Ltd.
 The National Central Co-operative Bank Ltd.
 Bhagalpur Central Co-operative Bank Ltd.
 Gopalganj District Central Co-operative Bank Ltd.
 Katihar District Central Co-operative Bank Ltd.

Chhattisgarh

 The Chhattisgarh RajyaSahakari Bank Maryadit

Goa

 The Bicholim Urban Co-operative Bank Ltd.

 The Goa state co-operative bank ltd.
 The Margao Urban co-operative bank ltd
 Candolin Urban Co-operative Credit Society
 Citizen Co-op Bank
 Goa Urban Co-operative Bank

Gujarat

 The Mehsana Urban Co-operative Bank Ltd.

 Ahmedabad District Cooperative Bank Ltd.
 Amreli Dist Co-Operative Bank Ltd.
 Junagadh Commercial Co-operative Bank Ltd.
 Mahesana Nagrik Co-operative Bank Ltd
 MERCANTILE CO-OPERATIVE BANK LTD
 Nagrik Bank LTD. (Rajkot)
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  The Navnirman Co-operative Bank Ltd
 SEWA Cooperative Bank Ltd
 Surat national co-operative bank Ltd.
 Textile Traders Co-operative Bank Ltd
 Valsad District Central Co-operative Banks Ltd

Rajkot district co-operative bank ltd

Haryana

 The Haryana State Co-operative Apex Bank Ltd.

Himachal Pradesh

 Kangra Co-operative Bank Ltd.

Jammu and Kashmir

The Jammu and Kashmir State Co-operative Bank Ltd.

Karnataka

 Sirsi Urban Bank

 Suco Bank
 The Karnataka State Co-operative Apex Bank Ltd
 Guardian Souharda Sahakari Bank Niyamitha

Kerala

 Kerala State Co-Op Bank

 Dist. Co-Op Bank,Quilon (Kollam)
 Dist. Co-Op Bank,Pathanamthitta
 Pala Urban Co-Op Bank

Madhya Pradesh

 The Madhya Pradesh Rajya Sahakari Bank

 Bhopal Cooperative Central Bank

Maharashtra

24
  The Nasik District Central Co-op Bank Ltd., Nasik.
 The Bassein Catholic Co-Operative Bank Ltd., Papdy, Vasai.
 Bharat Co-op. Bank Ltd.
 The Deccan Merchants Co-operative Bank Ltd., Mumbai

Meghalaya

 THE TURA URBAN CO-OPERATIVE BANK LTD (TURA)

Rajasthan

 The Rajasthan State Co-operative Bank Ltd.

 Integral co op bank
 Jaipur central co-oprative bank
 The thane bharat sahakari bank
 Madhav nagrik sahkari bank

Tripura

 The Tripura State Co-operative Bank Ltd.

Tamil Nadu

 Chennai Central cooperative bank Ltd.(Chennai)

 The Tamil Nadu State Apex Cooperative Bank Ltd.

Uttar Pradesh

 Banda District Coperative Bank Ltd

West Bengal

 The West Bengal State Co-operative Bank Ltd.

 The Burdwan District Central Cooperative Bank

In Union Territories

Andaman and Nicobar Islands

Andaman and Nicobar State Co-operative Bank Ltd. Maulana Azad Road,
Portblair. (India) It has around 41 branches on these islands.
25
Chandigarh

 Chandigarh Urban Cooperative Bank

 Punjab State Cooperative Bank

2] Future opportunities for financial services and sector in India

A healthy banking system is essential for any economy striving to achieve good
growth and yet remain stable in an increasingly global business environment. The
Indian banking system has witnessed a series of reforms in the past, like
deregulation of interest rates, dilution of government stake in PSBs, and increased
participation of private sector banks. It has also undergone rapid changes,
reflecting a number of underlying developments. This trend has created new
competitive threats as well as new opportunities. This paper aims to foresee major
future banking trends, based on these past and current movements in the market.

Given the competitive market, banking will (and to a great extent already has)
become a process of choice and convenience. The future of banking would be in
terms of integration. This is already becoming a reality with new-age banks such as
YES Bank, and others too adopting a single-PIN. Geography will no longer be an
inhibitor. Technology will prove to be the differentiator in the short-term but the
dynamic environment will soon lead to its saturation and what will ultimately be
the key to success will be a better relationship management.

If one were to say that the future of banking in India is bright, it would be a gross
understatement. With the growing competition and convergence of services, the
customers (you and I) stand only to benefit more to say the least. At the same time,
emergence of a multitude of complex financial instruments is foreseen in the near
future (the trend is visible in the current scenario too) which is bound to confuse
the customer more than ever unless she spends hours (maybe days) to understand
the same. Hence, I see a growing trend towards the importance of relationship
managers. The success (or failure) of any bank would depend not only on tapping
the untapped customer base (from other departments of the same bank, customers
of related similar institutions or those of the competitors) but also on the
effectiveness in retaining the existing base.

26
India has witness to a sea change in the way banking is done in the past more than
two decades. Since 1991, the Reserve Bank of India (RBI) took steps to reform the
Indian banking system at a measured pace so that growth could be achieved
without exposure to any macro-environment and systemic risks. Some of these
initiatives were deregulation of interest rates, dilution of the government stake in
public sector banks (PSBs), guidelines being issued for risk management, asset
classification, and provisioning. Technology has made tremendous impact in
banking. ‘Anywhere banking’ and ‘Anytime banking’ have become a reality. The
financial sector now operates in a more competitive environment than before and
intermediates relatively large volume of international financial flows. In the wake
of greater financial deregulation and global financial integration, the biggest
challenge before the regulators is of avoiding instability in the financial system.

The Retail Banking is witnessing a 30 % Growth in India, with the top banks
experiencing a rise as much of 70%. Insurance is growing by 50%, Mutual Funds
growing by 33%, Credit Cards by 35%. Today Banking sector employs about
900000 people and with full reforms it can employ 15, 00,000 people. However
one of the crucial impediments to growth for this sector is the acute shortage of
manpower talent of this specific nature.

 Further, India can grab jobs from other countries. A.T. Kearney Inc. predicts that
half a million financial-services jobs will go offshore to India by 2008. The
employers are hunting for skilled employees creating great opportunities for young
graduates. In the wake of a severe manpower shortage, India is witnessing the
highest growth rate in the salaries in the world! According to the 2006 Salary
Guide issued by Kelly Services India, the country has the highest average salary
increase at 13.9 %. Wage rises in Hong Kong are forecast at 1.5%, while those in
Japan, Taiwan, South Korea and Malaysia are likely to be between 2% and
3.5%.Indeed, an acute manpower shortage especially in the finance and analytics
sector has resulted in a peculiar situation of unrelated sectors competing with one
another.

Banks have to deal with the sophisticated clientele with the help of latest
technology like e-banking. Lack of coordination and cyber crime encroaching E-

27
banking if taken in the right way by bank and customer would take the economy to
its best and make it a boon to customer

Introduction and development of information technology will not only effect the
banking system of our country but the entire banking system of the world it is high
time to advise and train the banking personnel on the acquisition installation and
use of the information technology through there was a crime against the
introduction of information technology it is better to adopt it to face the still
competition from the ever dynamic foreign counterpart. As the banks become more
sophisticated, the benefit of information technology will grow in to leaps and
bounds. Further research may be conducted on the feasibility of the introduction of
home banking, mobile. ATM, office banking, phone banking edger payment
system and so on.

In the field of technology based banking, information technology and electronic

funds transfer system have emerged as the twin pillars of modern banking
development. Products offered by banks have moved way beyond conventional
banking and access to these services have become round the clock . This, indeed, is
a revolution in Indian banking but some systemic changes are urgently required.
Cyber laws and other procedures which are commensurate with modern
technology based banking have to be put in place immediately and sufficient
regulatory mechanism has to be instituted so that the fast strides in banking
automation does not go on undesirable lines.

Corporate governance in banks and financial institutions has assumed great

importance in India and there is still some ground to cover to making all banking
institutions safe, sound and efficient. It is necessary that institutions, which form a
part of the financial system, have internal management, governance and
accountability structures, which measure up to the highest standards. Some of the
issues, which need to be debated are those of compatibility of corporate
governance with public ownership of banks and making the system accountable to
economic institutions and regulators. It is also imperative that there is complete
alignment between the goals of the management of the banks and the goals of
shareholders.

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The financial system in India comprises of financial institutions, financial markets,
financial instruments and services. The Indian financial system is characterized by
its two major segments - an organized sector and a traditional sector that is also
known as informal credit market. Financial intermediation in the organized sector
is conducted by a large number of financial institutions which business
organizations are providing financial services to the community. Financial
institutions whose activities may be either specialized or may overlap are further
classified as banking and non-banking entities. The Reserve Bank of India (RBI) as
the main regulator of credit is the apex institution in the financial system. Other
important financial institutions are the commercial banks (in the public and private
sector), cooperative banks, regional rural banks and development banks. Non-bank
financial institutions include finance and leasing companies and other institutions
like LIC, GIC, UTI, Mutual funds, Provident Funds, Post Office Banks etc.

This trend has been visible in India as well where financing of infrastructure was
till recently a Government activity. This has been so because infrastructure
services are difficult to price so as to fully cover all costs thereby making it
unattractive for private sector participation. Also the provisions of infrastructure
usually involve high upfront costs and long payback periods and the private
investor is often unable to provide the large initial capital required and is not
capable of obtaining matching long-term finance. Finally cross subsidization,
which forms an important part of infrastructure provision, is easier done by public
sector than the private.

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 Bibliography
1] For C.A. economics H.L. Ahuja
2] Reserve bank of india.com
3] investopidia.com

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