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banking sector
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Published by: aaaappppaaaa on Sep 14, 2010
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AProject ReportOn“Kaleidoscopic View on Indian Banking Sector”PROJECT SUBMITTED TONIS Academy, AurangabadIn partial fulfillment of the requirementsFor theMaster in Business AdministrationAcademy year 2008-10SUBMITTED BYAvinash S. AshtureEnroll No. 4740800340ACKNOWLEDGEMENTSThe Summer Internship Programme was undoubtedly a great learning experience forme and has helped me learn immensely. I feel great pleasure in expressing my regards and profound sense of gratitude to my faculty guide Mrs. Rajlaxmi Bhosale (NIS Academy, Aurangabad) and company guide M/s.Sonali Dixit (Asst. Manager, HDFCBank, Aurangabad) for their inspiration, guidance and support in the completionof this project report. I also express my sincere thanks to ICICI Bank, Aurangabad which helped me to a great extent in conducting this study by providing me the required data. The constant support and inputs rendered by my guides were invaluable. I am extremely grateful to them for providing the necessary inputs, andguidance at every stage of my project.I express my sincere thanks to the administration of NIS Academy, Aurangabad whoprovided adequate support and facilities to accomplish my work of data collection and completion of project report on time. Last but not the least, I am highlythankful to my friends who were always there whenever their support was needed.Date:Place: NIS Academy, Aurangabad.
INDEXSr noTitlePage no01Introduction402Needs of the project603Objectives of the project704The role of economists in Banks805History of banks in India1006Banks in India1407Reserve Bank of India 1508Nature baking in India2009Kinds of Banks2110ROLE OF BANKS IN A DEVELOPING ECONOMY2311BRANCH SETUP AND STRUCTURE2612STRATEGIC ISSUES IN BANKING SERVICES3413INNOVATION IN BANK3914TECHNOLOGY IN BANKING4215REGULATIONS AND COMPLIANCE4416ENTREPRENEURSHIP5017PERFORMANCE AND BENCHMARKING5218RECENT MACROECONOMIC DEVELOPMENTS AND THE BANKING SYSTEM5919HUMAN RESOURCE DEVELOPMENT IN BANKING-6620Conclusion6721Bibliography68INTRODUCTIONIn my inaugural address last year, I had indicated a vision for Indian banking in the new millennium – that of a vibrant, internationally active banking system, drawing upon its innate strengths and comparative advantages to make India a major banking centre of the world. I had pointed out then that, while it may take upto 10 or even 15 years to achieve this vision, the time to begin was now. Recent developments have only served to bring forward the urgency attached to embarking upon this quest. Even as we do so, it is necessary to recognize that, in viewof recent global developments and the economic slowdown, the progress towards this goal would call for even greater effort and determination. In this context,the theme chosen for this year’s Conference i.e., "Indian Banking: Paradigm Shift"is most timely as it provides an opportunity to deliberate on the new challenges ahead, and the action that we must take to manage them. I am happy to be a part of these deliberate ions and to deliver the inaugural address to the 23rd Conference of Bank Economists here today. As you are aware, global economic prospects turned sharply adverse since September 2001 following the terrorist attacks onthe US. The possibilities of a recovery in the global economy have become highly uncertain, belying the initial expectations of a V-shaped recovery as well asthe subsequent hopes of a U-shaped recovery. As of now, the consensus of forecasts settles around 2.4 per cent for world GDP growth for 2001. World trade volumegrowth could slow down to around 1.3 per cent and net capital outflows from developing countries may now be larger than anticipated earlier. Although the sharpspurt in international oil prices has abated, their future behavior remains unc
lear. Macroeconomic weaknesses have also been associated with an erosion of business confidence. Insurance, airlines, tourism and hotel industries have been hithard and the exposure of financial institutions to these industries can be a potential source of vulnerability. Despite the relatively inward-looking nature ofthe Indian economy, it cannot remain insulated from these international developments. The direct effects of these external developments on our banking system are expected to be limited. Indirect effects, especially through exports and subdued industrial activity could, however, impact upon the asset quality of our banking system and other segments of the financial system. The need to constantly monitor international developments and take appropriate and often, preemptive action add an entirely new dimension to the progress of our banking system towardsits longer-term vision. We have made considerable progress in implementing banking and financial sector reforms. There is also some improvement in the financialperformance of the banking system in terms of various indicators of operating efficiency. Nevertheless, there are several areas regarding the efficiency of ourbanking system – rather than its stability – that raise concerns, especially duringa period of generalized uncertainty. The level of non-performing assets (NPAs)continues be high by international standards, preempting funds for provisioningand eating into the performance and profitability of financial intermediaries. The response to the debt recovery and asset restructuring initiatives undertakenas part of financial sector reforms has also been slow. In the period ahead, ourfinancial system will also have to prepare for a tightening of the prudential norms as the new Basel Accord becomes effective and a fuller response to the current financial environment emerges. Our financial institutions continue to be susceptible to financial market turbulence, especially in the equity market. Upgrading technical skills, technology, research and human capital, developing effective ‘front office’ strategies and fortifying internal rules of governance and responsibility assumes a renewed priority in the fast changing scenario. The face of banking, as we have known it, is also changing rapidly. India is approaching an era of financial conglomorisation and ‘bundling’ in the provision of financial services. Besides infusing heightened competition, there are implications for the regulatory and supervisory regime. Banks and financial institutions have to prepare for changes in the regulatory framework towards a more focused, comprehensive andefficient environment that eschews regulatory forbearance. Legal reforms accordingly will have to ascend the hierarchy of priorities in the reform process. Against this background, in this talk, I propose to focus on the main challenges facing Indian banking, such as, the role of financial intermediation in differentphases of the business cycle, the emerging compulsions of the new prudential norms, and benchmarking the Indian financial system against international standardsand best practices. I will also say a few words about the changing context of regulation and supervision of the financial system in India, the need for introducing new technology in the banking and financial system, and the importance of strengthening skills and intellectual capital formation in the banking industry.NEEDS FOR THE PROJECT:Usually all persons want money for personal and commercial purposes. Banks are the oldest lending institutions in Indian scenario. They are providing all facilities to all citizens for their own purposes by their terms. To survive in this modern market every bank implements so many new innovative ideas, strategies, andadvanced technologies. For that they give each and every minute detail about th

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