Banking Industry

Indian Banking Industry is more than 200 hundred years old, as State Bank of India's first branch established in 1806, a government owned bank. The Reserve Bank of India act as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. also their are few foreign banks that are operating in India.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity.

As we all know when the world banks are crying because of recession, Indian Banks are more relaxed and well functioning too. But this is also the fact that if the giants hit by storms the followers also feel the shake, so as the Indian banks, but within the necessary time our great Indian economists took preventive steps to heal them. And our banking Industry is not hit by recession, just felt a slowdown, but now they are out of it.

Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation, invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.

The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions.

The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected to remain the same in the coming years. Based on the projections made in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan, the report forecasts that the pace of expansion in the balance-sheets of banks is likely to decelerate.

The country’s middle class accounts for over 320 million people. In correlation with the growth of the economy, rising income levels, increased standard of living, and affordability of banking products are promising factors for continued expansion.


The Indian banking Industry is in the middle of an IT revolution, focusing on the expansion of retail and rural banking. Players are becoming increasingly customer-centric in their approach, which has resulted in innovative methods of offering new banking products and services. Banks are now realizing the importance of being a big player and are beginning to focus their attention on mergers and acquisitions to take advantage of economies of scale and/or comply with Basel II regulation.

The leading market research company RNCOS has launched its new report on the Indian Banking industry, "Opportunities in Indian Banking Sector". After a thorough research on banking sector of India, the report said that it is different from the banking sector of other countries because of the country’s social, economic and geographical characteristics. This report also forecasts that the Indian banking sector will grow at a CAGR of around 23.3% by 2011.

I must say after evaluation, that this industry might grow slow, but grow well. The investor will be in win win situation, as the big players easily survived the recession, moreover baking players are looking for more alternatives too. So their is a huge possibility of this sector to grow in coming years.