Colloquium: October 29, 2007
Mrs. Kalpana Vishwanathan
Trends in the banking sector
As Mrs. Kalpana Vishwanathan correctly pointed out, “Team Management in today’s world means ‘managing men tactically’.” And this is in no way different from the scenario in today’s Banking Industry. Success of a bank really depends on how the bank identifies the right customers and retains them. But this was not the case in the past.
The Past: -
The Banking Industry is considered as the back bone of our country for the economic growth. Prior to 1969, banks were serving only certain select people. In 1969, nationalization of banks took place which opened doors to all the people - even people below poverty line. But this made banks to suffer from losses. In 1990, when the Government saw that the banks were making losses, Government started employing more stringent rules and putting other measures in place. Since then profit earning became the motive and banks were considered as commercial organizations dealing with other’s money. Since the Government was also running short of money, it refused to provide more capital to the banks. This made banks to be more disciplined, to choose the correct customers and retain them. In 1997-98, a crisis broke out in East Asia – Singapore which had a strong banking system, crashed – but the Indian banking system went unaffected.
The Present:-
The present position of banks is delicate with more mergers and acquisitions in the business way of life. World is today considered as a global village financially also. Banks have started recruiting young MBA’s and CA’s to gear up for the change. Online banking has given a new face to the Indian banking system. At present India’s GDP growth is 8.5 – 9 % which is next to China. For a country to grow at this rate, banking system should be very strong.
The Future:-
By 2009 as per WTO, we are supposed to open our banking sector to FDI which is up to 74%. As Government holds majority stake in nationalized banks, so FDI cannot be made in them.
With growing savings habit of the people, the banks are finding more business. This will give more employment opportunity to youngsters. Modern trend found in youngsters is that most of the MBAs prefer to work in banking sector. Introduction of Online banking and the awareness about Investment banking is the crux of banking in the days to come.
Rajivkrishnan V
I MBA
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