The Indian banking industry is in for daunting times. Despite economic boom which throws a host of opportunities for the banking industry to grow ahead, the major challenge for the Indian banks is to create a size that would be effective in dealing with the global competition, said Dun & Bradstreet. (D&B) Banks in Asia, particularly in China, are large in size compared to Indian banks. It is important that Indian banking industry needs larger amounts of capital to sustain growth in the future to take on the competition from the global banks in a big way.
While there have been plenty of opportunities, responding to them positively, and realising them to a desired extent would be a great challenge. With right strategies in harnessing technology and human resources developing market segments, design of new generation products and services, focus on efficient customer service and pursuing global aspirations can take Indian banks to the next generation banking, Dun & Bradstreet maintained.
The government’s proposed decision to remove limitations on the wholly-owned subsidiaries of foreign banks effective April 2009, which allow them to get listed and dilute their stake apart from entering into mergers and acquisitions, will further intensify the competition for the domestic banks. Another equally important challenge would be harnessing the benefits of technology. Though it is in progress across all the banks, the synergies and efficiencies in public sector banks need to move at a much faster pace. Similarly, the PSBs need to step up the use of infrastructure related to Real Time Gross Settlement and Electronic Fund Transfer Systems.
The rising income levels of people will give scope to design and develop a wide range of personal financial products and fee-based services. Focus on infrastructure development and certain key sectors like rural economy, health and education offer exciting business opportunities for the extensive branch network of PSBs located in the rural and semi-urban areas, it pointed out.
However, given the high economic growth, the Indian banking industry can look forward to a promising period ahead. Growing international operations of Indian business will provide Indian banks with global opportunities, it said. Source: Hindustan Times
