BANKING INDUSTRY IN INDIA

Performance of the banking sector is considered as a proxy for the economy as a whole, due to banks' wide spectrum of exposure across industries. Unfortunately for India, the banking sector has historically remained under the impact of non-competitiveness, poor technology integration, high NPAs and grossly under productive manpower. Earlier profitability gained only secondary importance, since banks lived in the comfort of a controlled environment. However, today banks cannot survive only set targets and evolve strategies to reach them.
There is certainly a paradigm shift in banking in India in the recent past. At present profitability, capital restructuring and transparency are considered important and significant for banks. Also, banks in India have started realising the need to be `customer focussed' that in turn leads to `customer appreciation' which is imperative for survival and growth.
The first change along this line was brought in by the foreign banks with their emphasis on high quality and efficient service combined with the technological advantages like sattelite banking and tele-banking manned by skeletal staff and lesser number of branches. Further, development of special manpower, innovative products, technology exploitation and personalised services play a crucial role in the banking industry today, since the customer has more options in choosing a bank. Thus leading to consumerism in the banking sector. Also, since customers are becoming more sophisticated and educated, their expectations from the neighbourhood bank are increasing .
The private banks wisely chose to use this opportunity to prepare for the future rather than scramble for current business. Many of them refocused their activities, seeking clearly defined identities in terms of services and customer segments. To sum, the new private sector banks are poised to redefine banking in India. Though they do not pose a threat to the existing private banks they will certainly force them to gear up their strategies to remain in the field. This will lead to intense competition among the new banks, that would also serve as a challenge to the foreign banks.