Management of financial institution and services

Prepared by:Soni Dhaval R. (56)

Submitted to:Prof. Mr. Lalit Tank


No. Topic Page No.
1. Banking Financial Institute in India Structure of banking in India Commercial Bank - Function of commercial bank - Role of commercial banks in economy development Foreign Bank Co-operative Banks 2. Future Opportunities for Financial Services and Sector in India? 3 Bibliography 26 30 18 21 3 4 5


1] Banking financial institutes in India

Banking in India
Banking in India originated in the first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan. The oldest bank in existence in India is the State Bank of India, which originated in the "The Bank of Bengal" in Calcutta in June 1806.After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.

The first fully Indian owned bank was the Allahabad Bank, established in 1865. Promoters opened banks banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. . Indians had established small banks, most of which served particular ethnic and religious communities.

Current situation
Banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government Currently, 88 scheduled commercial banks (SCBs) 27 public sector banks, 29 private banks

Structure of banking in India Reserve bank of India

Scheduled banks

Non scheduled


Scheduled commercial

Scheduled cooperative

Public sector banks Private bank Foreign banks Regional banks Scheduled urban Scheduled state

Nationalize bank

SBI and its associates

Old private sector bank

New private Sector bank


A] Commercial Bank:The act of borrowing and landing and there by the creation of credit is a special type of exchange transaction which involves future payment of the principal sum borrowed as well as the rate of interest on it. Different credit institution lends money for different purposes and is collectively called the financial system.

Function of commercial bank a] Accepting Deposits
The bank borrows in the form of the deposits. This function is important because banks mainly depend on the funds deposited with them by the public. The deposit received by the banks may be of the following types. i] Demand or current account deposit: If a deposits money in the bank in the current account, he can withdraw it in part or in full at any time he likes without notice. These accounts are generally kept by businessman whose requirements of making business payment are quite uncertain. Usually no interest is paid on them because bank can not utilize these short-term deposit and must keep almost cent percent received again them. ii] Fixed deposit or time deposit: These deposits are made for a fixed period of time, which varies from fifteen days to a few years. These deposit cannot be withdraw before the expiry of that period. However, a loan can be taken from the against the security of this deposits within the period. A higher rate of interest is paid on the fixed deposit carry a good rate of interest they are good source of investment by the people who are in a position to save. iii] Saving bank deposit: in this case the depositor can withdraw the case usually once a week. Sometimes there are also restrictions as to the total amount that can be withdrawn at one time and the total amount that can be place in one deposit. These deposits are generally

made by the people of small means, usually, people with fixed salaries, for holding their short-term saving. Like the current account deposits, the saving bank deposits are payable on demand and also they can be drawn upon through cheques. But in order to discourage people to use the saving bank deposits very frequently, there are some restrictions on the number of times withdrawn that can be made from this account.

b] Advancing loan
Another function of the bank is to give the loans to others. If the bank does not lend the deposited money to others, how can it pay the interest on the deposit to depository? Banks give loan to businessmen and firms usually for short period only. This is so because the bank must keep itself ready to meet the demand of the people who have deposited money for short period only. The bank must strike a fine balance between liquidity and profitability.

i] By allowing an overdraft:
Those people who keep current account with the bank are sometimes given the right to over draft their account. In other words; people make arrangements with banks that if a cheque has been drawn by them which is not covered by the deposit, then the bank should grant the overdraft and honor the cheque. Thus under overdraft arrangement people can get more than they have deposited but they have to pay interest on the extra amount which has to be paid back with in a short period.

ii] Loans by creating a deposit:
The bank advances money not only in the form of overdraft but also in the form of loan given by creating a deposit. When a businessman wants to gat a loan from the bank he has to satisfy the manager about his ability to pay, the soundness of his venture. It will be seen that when the loan has been granted a deposit has been created. That is why it is said that in modern time ³every bank credit creates a deposit or that, deposit of cash have changed into deposit of credit´.


c] Discounting bills of exchange or Hun dies
A very important function of a modern bank is to discount bills or hundies of businessman. It is like this. A businessman buys goods and is granted credit say, for a month. The seller of the goods drew bills of exchange which the purchaser is asked to sign. The bill order the purchaser to pay a certain sum after the expiry of one month if the seller goes on selling goods on this basis, he will soon find that all his stock is gone and he has got only these hundies in his cash box, unless these hundies are changed into cash his business will come to a standstill. He therefore does not keep these hundies which him till they mature for payment. But he take them to the bank and get the present wort of the hundies leaving the bank to realize them when the date of payment comes. This called discounting a bill it is obvious that has advanced money to the businessmen for the period of the currency of the bill. d] Transfer of money Banks transfer money from one place to another place for their customers banks remit the funds of the people by means of a bank draft or a cheque. This is a cheap as well as safe method of transferring money from one place to another.

e] Miscellaneous functions
A bank now days serve its customers in various other ways. It has µsafe deposit vaults¶ which are also called lockers. They are meant to keep the valuables of customers as well as pays dividends on behalf of Joint Stock Companies. It purchases and sells stock and shares of companies for its clients. It pays insurance premium on behalf of their customers from their deposits. It executes the wills of deceased customers and acts for them as a trustee.


Role of commercial banks in economy development
The rate of capital formation in turn depends on the rate of savings. and investment and proper allocation of investible funds among different sectors and user.

a] promotion of saving:
People save for various reasons. Thus people save to provide for future needs, such as period of unemployment, old age, sickness, to provide for education and marriage their children, to own property such as real estate, houses etc. in future , and to purchase durable consumer goods. But they require assets in the form of which they should keep their saving in safe custody and earn a rate of return as well. Commercial banks promote saving by providing a wide range of deposits with varying combinations of liquidity and rate of interest of suit the needs and preferences of different saver. It has been found that with the growth of commercial banking in unbanked and under-banked regions, the house hold saving go up. As a store of value, bank deposits enjoy certain advantages over tangible assets and other financial assets. This underlines the importance of keeping price stable, if saving by house hold is to be promoted.

b] Mobilization of savings
Not only do the banks encourage savings but they also mobilize savings done by several households and make them available for production and investment to the entrepreneurs various sectors of the economy. This function of mobilizing savings is of crucial important because in the modern monetary economy, the act of saving has been separated from: real investment. Savings are done by millions of households and firms, who are individual saving, may be very small, savings of some may be of short-term and of others of long-term nature. Banks and other financial intermediaries collect or mobilize these savings before these can be made available to the producers or investors. Without the banks these savings would have remained scattered and also idle, that is, would not have been utilized for productive and investment purposes.


c] Allocation of fund
Allocation of funds or economic surplus among different sectors, users and producers so as to make maximum social return and thus to ensure optimum utilization of savings is an other important function performed by the banks. Whereas the corporate firms can raise resources through sale of equity shares and debentures, the non corporate firms and borrowers depend greatly on banks for financing the needs of both working capital and fixed capital. Through the landing rates of interest determined by market mechanism or fixed by the Central Bank of the country credit advanced by the banks get rationed among various potential borrowers and sectors. Further. Before lending banks take into account the credit-worthiness or capacity to pay back the leans. Thus the banks are in a better position to judge the returns or productivity from the uses for which the funds are lent out. This helps in maximization of returns from scarce financial resources. However, it may be mentioned, that commercial banks do not always work and allocate resources in the way that maximizes production or social welfare.

d] Promotion of trade, production and investment
By encouraging inducement to save and also mobilizing savings from the public. Banks to increase the aggregate rate of investment in the economy. It may also be noted that bank not only mobilize the saved funds from the public, but also themselves create deposits or credit which serve as money. The new deposits are created by the banks when they lend money to the investors or other users. These deposits are created by the banks in excess of the cash reserve they obtain through deposits by the public. These days, the bank deposits, especially demand deposits, are as much good money as the currency issued by the Government or Reserve bank of India. This creation of credit, if it is used for productive purposes, greatly enlarges production and investment and thus promotes economic growth.


Name of the commercial banks are given below:1] United Bank of India (UBI) Founded Headquarters Key people Industry 2] Reserve Bank of India (RBI) Founded Headquarters Governor Central Bank of 3] Allahabad Bank Founded Headquarters Key people Industry 4] Andhra Bank Founded Headquarters Key people Industry Products 5] Bank of Baroda Founded Headquarters Key people Industry July 20, 1908 Mumbai, India M D Mallya, Chairman & MD Banking, Capital Markets and allied indus. November 20,1923 Hyderabad K Ramakrishnan (CMD) Financial Private Banking April 24, 1865 Kolkata K.R. Kamath Chairman & MD Financial Commercial banks April 1, 1935 Mumbai, India Dr. Duvvuri Subbarao India 1950, India Kolkata P.K Gupta, Chairman & MD Financial Commercial banks


6] Bank of Maharashtra (BoM) Founded Headquarters Key people Industry 7] Canara Bank Founded Canara Bank Hindu Permanent Fund (1906) Canara Bank Ltd (1910) Canara Bank (1969) Bangalore, India A C Mahajan, Chairman & Managing Director, D L Rawal, Executive Director G S Vedi, Executive Director. Financial Commercial banks 16th September, 1935 Mumbai, India Government of India Financial Commercial banks

Headquarters Key people

Industry 8] Central Bank of India Founded Headquarters Key people Industry 9] Corporation Bank Founded Headquarters Key people Industry

1911 Mumbai, India Ms. Homi. A. Daruwala,Chairman & MD Financial Commercial banks

Udipi, 1906 Mangalore, India B. Sambamurthy, Chairman Banking

10] Dena Bank Founded Headquarters Key people Industry 26th May, 1938 Mumbai, India Shri. P. L. GAIROLA Chairman & MD Commercial Banking

11] Indian Bank Founded Headquarters Key people Industry 1907 Chennai, India Mr. M.S.Sundara Rajan (Chairman and MD) Banking

12] Indian Overseas Bank ( IOB ) Founded Headquarters Key people Industry 13] Oriental Bank of Commerce Founded Headquarters 19th February, 1943, in Lahore Pakistan Madras, February 10, 1937 Chennai, India Chairman & MD S A Bhat Banking Capital Markets

14] Punjab and Sind Bank Founded Headquarters 15] Punjab National Bank Founded Headquarters Key people Industry 16] Syndicate Bank Founded Headquarters Key people Industry Udupi, 1925 (as Canara Industrial and Banking Syndicate Limited) Manipal, Karnataka State, India George Joseph, Chairman & M.D. Banking, Insurance, Capital Markets

1908 New Delhi.

Lahore, 1895 (British India) New Delhi, India Dr. K.C. Chakrabarty Chairman and M.D. Banking Insurance Capital Markets

17] Union Bank of India (UBI) Headquarters Key people Industry 18] UCO Bank Founded Headquarters Key people Industry 19] Vijaya Bank Founded Headquarters Key people Industry 20] IDBI Bank Founded Headquarters Key people Industry 1964 India Yogesh Agarwal ² Chairman Finance 1931 at Mangalore, India. Bangalore, India Albert Tauro, Chairman & M.D. Financial Commercial banks 1943 Kolkata Shri S.K. Goel Chairman & MD Financial commercial bank Mumbai, India Mavila Vishwanathan Nair Chairman &MD Financial Commercial banks


B] Private Banks in India
1] Axis Bank Founded Headquarters Key people Industry 2] Bank of Rajasthan Founded Headquarters Key people Industry 3] Bharat Overseas Bank Ltd Headquarters Key people 4] Catholic Syrian Bank Founded Headquarters Key people Industry 5] Centurion Bank of Punjab Founded Headquarters Key people Industry Panaji, 1994 Mumbai, India Mr. Rana Talwar, Chairman Banking Insurance Capital Markets 26th November 1920 at Thrissur Thrissur, India Shri.R.Venkataraman , Chairman Financial Commercial banks Chennai, Indian overseas bank Udaipur in 1943 Jaipur R.K.Jain Private Banking 1994, India. India P.J. Nayak, Chairman & CEO Financial Commercial banks


6] City Union Bank Founded Headquarters Key people Industry 7] Development Credit Bank 8] Dhanalakshmi Bank Founded Headquarters Key people 14th November 1927 Thrissur , Kerela, India Sri Ghyanendra Nath Bajpai as Chairman , Sri P.S.Prasad as Managing Director & CEO. 31st October1904 Tamil Nadu, India Shri. S. Balasubramanian, Chairman Private Banking

9] Federal Bank 10] Ganesh Bank of Kurundwad 11] HDFC Bank Founded Headquarters Key people Industry August, 1994 Mumbai, India Mr. Aditya Purii, MD Banking, Insurance, Capital Markets.

12] ICICI Bank (Industrial Credit and Investment Corporation of India) Founded Headquarters Key people 1955 Mumbai, India N Vaghul, K.V.Kamath, Chanda Kochhar, Kalpana Morparia, V Vaidyanathan, Madhabi Puri Loans, Credit Cards, Savings, Investment vehicles, Insurance



13] Indusind Bank Founded Headquarters Key people Industry 14] ING Vysya Bank Founded Headquarters Key people 1930,India. India Vaughn Richtor, MD & CEO K.R Ramamoorthy, Non-Executive Part-time Chairman Financial Commercial banks 1994 Mumbai, India Mr. R. Seshasayee MD Private Bank

Industry 15] Jammu & Kashmir Bank Founded Headquarters Industry 16] Karnataka Bank Founded Headquarters Key people 17] Karur Vysya Bank Founded Headquarters Key people Industry

1938 India Financial industries

February 18th, 1924 Kodialbail, India Shri Ananthakrishna, Chairman & CEO

1916 Karur, Tamil Nadu, India P. T. Kuppuswamy Group Chairman Banking.


18] Kotak Mahindra Bank Founded Headquarters Key people Industry 19] Lakshmi Vilas Bank 20] Nainital Bank 21] Ratnakar Bank 22] SBI Commercial and International Bank 23] South Indian Bank 24] Amazing Mercantile Bank 25] Yes Bank 1985 (as Kotak Mahindra Finance Ltd) Mumbai, India Mr. K.M. Gherda, Mr. Uday Kotak, Dr. Shankar Acharya Banking


C] Foreign Bank Foreign banking in India
In India Development financial institutions and refinancing institutions were meeting specific sectoral needs and also providing long-term resources at concessional terms, while the commercial banks in general, by and large, confined themselves to the core banking functions of accepting deposits and providing working capital finance to industry, trade and agriculture. Consequent to the liberalization and deregulation of financial sector, there has been blurring of distinction between the commercial banking and investment banking. Reserve Bank of India constituted on December 8, 1997, a Working Group under the Chairmanship of Shri S.H. Khan to bring about greater clarity in the respective roles of banks and financial institutions for greater harmonization of facilities and obligations. Also report of the Committee on Banking Sector Reforms or Narasimham Committee (NC) has major bearing on the issues considered by the Khan Working Group. The issue of universal banking resurfaced in Year 2000, when ICICI gave a presentation to RBI to discuss the time frame and possible options for transforming itself into an universal bank. Reserve Bank of India also spelt out to Parliamentary Standing Committee on Finance, its proposed policy for universal banking, including a case-by-case approach towards allowing domestic financial institutions to become universal banks. Now RBI has asked FIs, which are interested to convert itself into a universal bank, to submit their plans for transition to a universal bank for consideration and further discussions. FIs need to formulate a road map for the transition path and strategy for smooth conversion into an universal bank over a specified time frame. The plan should specifically provide for full compliance with prudential norms as applicable to banks over the proposed period.


Following are the list of the Foreign Bank 1] ABN- AMRO Bank Founded Headquarters Key people Industry 2] Barclays Bank Founded Headquarters Key people 1690 London, England, UK Marcus Agius, Chairman John Varley, Chief Executive Robert Diamond, President Banking 1991 Amsterdam, Netherlands Mark Fisher (CEO) Financial services

Industry 3] Citibank Founded Headquarters Key people

Industry 4] HSBC Founded Headquarters Key people Industry

1812 New York City, New York Vikram Pandit ² CEO, Gary Crittenden CFO, John Ferderson ² COOS. William R. Rhodes ² Chairman Finance

Hong Kong (1865) London, England, UK Stephen Green, Group Chairman Michael Geoghegan, Group Chief Executive Finance and insurance


5] Standard Chartered Bank Founded Headquarters Key people Industry 6] Deutsche Bank Founded Headquarters Key people Industry 1870 Frankfurt am Main, Germany Josef Ackermann, Chief Executive Officer and Chairman of the Management Board Finance and insurance 1853 London, England, UK E.Mervyn Davies CBE, Chairman Peter Sands, Chief Executive Banking

7] Abu Dhabi Commercial Bank Ltd Headquarters Key people Industry Mumbai, India Bahri & Mazroei Group Chairman & Managing Director Banking


D] Co-operative Banks Cooperative Banks in India
The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is an important constituent of the Indian Financial System, judging by the role assigned to co operative, the expectations the co operative is supposed to fulfill, their number, and the number of offices the cooperative bank operate. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India play an important role even today in rural financing. The business of cooperative bank in the urban areas also has increased phenomenally in recent years due to the sharp increase in the number of primary co-operative banks. Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965. Cooperative banks in India finance rural areas under:
y y y y

Farming Cattle Milk Personal finance

Cooperative banks in India finance urban areas under:
y y y y y y

Self-employment Industries Small scale units Home finance Consumer finance Personal finance


Some facts about Cooperative banks in India

Some cooperative banks in India are more forward than many of the state and private sector banks. According to NAFCUB the total deposits & lendings of Cooperative Banks in India is much more than Old Private Sector Banks & also the New Private Sector Banks. This exponential growth of Co operative Banks in India is attributed mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local clientele.



In States Andhra Pradesh 1. The Adilabad District Central Co-operative Bank Ltd. 2. The Anantapur District Central Co-operative Bank Ltd. 3. Chittoor District Co-operative Bank Ltd. 4. Cuddapah District Central Co-operative Bank Ltd. 5. Eluru District Central Co-operative Bank Ltd. 6. Guntur District Co-operative Bank Ltd. 7. Hyderabad District Central Co-operative Bank Ltd. 8. Kakinada Co-operative Central Bank Ltd. 9. Karimnagar District co-operative Bank Ltd. 10. Khammam District Co-operative Central Bank Ltd. 11. Krishna District Co-operative Central Bank Ltd. Arunachal Pradesh The Arunachal Pradesh State co-operative Apex Bank Ltd.

Assam The Assam Co-operative Apex Bank Ltd. Bihar The Bihar State Co-Operative Bank Ltd.
y y y y y y y

Arrah-Buxer District Central Co-operative Bank Ltd. Aurangabad District Co-operative Bank Ltd. Begusarai District Central Co-operative Bank Ltd. The National Central Co-operative Bank Ltd. Bhagalpur Central Co-operative Bank Ltd. Gopalganj District Central Co-operative Bank Ltd. Katihar District Central Co-operative Bank Ltd.


The Chhattisgarh RajyaSahakari Bank Maryadit

y y y y y y

The Bicholim Urban Co-operative Bank Ltd. The Goa state co-operative bank ltd. The Margao Urban co-operative bank ltd Candolin Urban Co-operative Credit Society Citizen Co-op Bank Goa Urban Co-operative Bank

y y y y y y y y y y

The Mehsana Urban Co-operative Bank Ltd. Ahmedabad District Cooperative Bank Ltd. Amreli Dist Co-Operative Bank Ltd. Junagadh Commercial Co-operative Bank Ltd. Mahesana Nagrik Co-operative Bank Ltd MERCANTILE CO-OPERATIVE BANK LTD Nagrik Bank LTD. (Rajkot) The Navnirman Co-operative Bank Ltd SEWA Cooperative Bank Ltd Surat national co-operative bank Ltd.

y y

Textile Traders Co-operative Bank Ltd Valsad District Central Co-operative Banks Ltd

Rajkot district co-operative bank ltd Haryana

The Haryana State Co-operative Apex Bank Ltd.

Himachal Pradesh

Kangra Co-operative Bank Ltd.

Jammu and Kashmir The Jammu and Kashmir State Co-operative Bank Ltd. Karnataka
y y y y

Sirsi Urban Bank Suco Bank The Karnataka State Co-operative Apex Bank Ltd Guardian Souharda Sahakari Bank Niyamitha

y y y y

Kerala State Co-Op Bank Dist. Co-Op Bank,Quilon (Kollam) Dist. Co-Op Bank,Pathanamthitta Pala Urban Co-Op Bank

Madhya Pradesh
y y

The Madhya Pradesh Rajya Sahakari Bank Bhopal Cooperative Central Bank

y y y y

The Nasik District Central Co-op Bank Ltd., Nasik. The Bassein Catholic Co-Operative Bank Ltd., Papdy, Vasai. Bharat Co-op. Bank Ltd. The Deccan Merchants Co-operative Bank Ltd., Mumbai



y y y y y

The Rajasthan State Co-operative Bank Ltd. Integral co op bank Jaipur central co-oprative bank The thane bharat sahakari bank Madhav nagrik sahkari bank


The Tripura State Co-operative Bank Ltd.

Tamil Nadu
y y

Chennai Central cooperative bank Ltd.(Chennai) The Tamil Nadu State Apex Cooperative Bank Ltd.

Uttar Pradesh

Banda District Coperative Bank Ltd

West Bengal
y y

The West Bengal State Co-operative Bank Ltd. The Burdwan District Central Cooperative Bank

In Union Territories Andaman and Nicobar Islands Andaman and Nicobar State Co-operative Bank Ltd. Maulana Azad Road, Portblair. (India) It has around 41 branches on these islands. Chandigarh
y y

Chandigarh Urban Cooperative Bank Punjab State Cooperative Bank

2] Future opportunities for financial services and sector in India
A healthy banking system is essential for any economy striving to achieve good growth and yet remain stable in an increasingly global business environment. The Indian banking system has witnessed a series of reforms in the past, like deregulation of interest rates, dilution of government stake in PSBs, and increased participation of private sector banks. It has also undergone rapid changes, reflecting a number of underlying developments. This trend has created new competitive threats as well as new opportunities. This paper aims to foresee major future banking trends, based on these past and current movements in the market. Given the competitive market, banking will (and to a great extent already has) become a process of choice and convenience. The future of banking would be in terms of integration. This is already becoming a reality with new-age banks such as YES Bank, and others too adopting a single-PIN. Geography will no longer be an inhibitor. Technology will prove to be the differentiator in the short-term but the dynamic environment will soon lead to its saturation and what will ultimately be the key to success will be a better relationship management. If one were to say that the future of banking in India is bright, it would be a gross understatement. With the growing competition and convergence of services, the customers (you and I) stand only to benefit more to say the least. At the same time, emergence of a multitude of complex financial instruments is foreseen in the near future (the trend is visible in the current scenario too) which is bound to confuse the customer more than ever unless she spends hours (maybe days) to understand the same. Hence, I see a growing trend towards the importance of relationship managers. The success (or failure) of any bank would depend not only on tapping the untapped customer base (from other departments of the same bank, customers of related similar institutions or those of the competitors) but also on the effectiveness in retaining the existing base. India has witness to a sea change in the way banking is done in the past more than two decades. Since 1991, the Reserve Bank of India (RBI) took steps to reform the Indian banking system at a measured pace so that growth could be achieved without exposure to any macro-environment and systemic risks. Some of these

initiatives were deregulation of interest rates, dilution of the government stake in public sector banks (PSBs), guidelines being issued for risk management, asset classification, and provisioning. Technology has made tremendous impact in banking. µAnywhere banking¶ and µAnytime banking¶ have become a reality. The financial sector now operates in a more competitive environment than before and intermediates relatively large volume of international financial flows. In the wake of greater financial deregulation and global financial integration, the biggest challenge before the regulators is of avoiding instability in the financial system. The Retail Banking is witnessing a 30 % Growth in India, with the top banks experiencing a rise as much of 70%. Insurance is growing by 50%, Mutual Funds growing by 33%, Credit Cards by 35%. Today Banking sector employs about 900000 people and with full reforms it can employ 15, 00,000 people. However one of the crucial impediments to growth for this sector is the acute shortage of manpower talent of this specific nature. Further, India can grab jobs from other countries. A.T. Kearney Inc. predicts that half a million financial-services jobs will go offshore to India by 2008. The employers are hunting for skilled employees creating great opportunities for young graduates. In the wake of a severe manpower shortage, India is witnessing the highest growth rate in the salaries in the world! According to the 2006 Salary Guide issued by Kelly Services India, the country has the highest average salary increase at 13.9 %. Wage rises in Hong Kong are forecast at 1.5%, while those in Japan, Taiwan, South Korea and Malaysia are likely to be between 2% and 3.5%.Indeed, an acute manpower shortage especially in the finance and analytics sector has resulted in a peculiar situation of unrelated sectors competing with one another. Banks have to deal with the sophisticated clientele with the help of latest technology like e-banking. Lack of coordination and cyber crime encroaching Ebanking if taken in the right way by bank and customer would take the economy to its best and make it a boon to customer Introduction and development of information technology will not only effect the banking system of our country but the entire banking system of the world it is high time to advise and train the banking personnel on the acquisition installation and

use of the information technology through there was a crime against the introduction of information technology it is better to adopt it to face the still competition from the ever dynamic foreign counterpart. As the banks become more sophisticated, the benefit of information technology will grow in to leaps and bounds. Further research may be conducted on the feasibility of the introduction of home banking, mobile. ATM, office banking, phone banking edger payment system and so on. In the field of technology based banking, information technology and electronic funds transfer system have emerged as the twin pillars of modern banking development. Products offered by banks have moved way beyond conventional banking and access to these services have become round the clock . This, indeed, is a revolution in Indian banking but some systemic changes are urgently required. Cyber laws and other procedures which are commensurate with modern technology based banking have to be put in place immediately and sufficient regulatory mechanism has to be instituted so that the fast strides in banking automation does not go on undesirable lines. Corporate governance in banks and financial institutions has assumed great importance in India and there is still some ground to cover to making all banking institutions safe, sound and efficient. It is necessary that institutions, which form a part of the financial system, have internal management, governance and accountability structures, which measure up to the highest standards. Some of the issues, which need to be debated are those of compatibility of corporate governance with public ownership of banks and making the system accountable to economic institutions and regulators. It is also imperative that there is complete alignment between the goals of the management of the banks and the goals of shareholders. The financial system in India comprises of financial institutions, financial markets, financial instruments and services. The Indian financial system is characterized by its two major segments - an organized sector and a traditional sector that is also known as informal credit market. Financial intermediation in the organized sector is conducted by a large number of financial institutions which business organizations are providing financial services to the community. Financial

institutions whose activities may be either specialized or may overlap are further classified as banking and non-banking entities. The Reserve Bank of India (RBI) as the main regulator of credit is the apex institution in the financial system. Other important financial institutions are the commercial banks (in the public and private sector), cooperative banks, regional rural banks and development banks. Non-bank financial institutions include finance and leasing companies and other institutions like LIC, GIC, UTI, Mutual funds, Provident Funds, Post Office Banks etc. This trend has been visible in India as well where financing of infrastructure was till recently a Government activity. This has been so because infrastructure services are difficult to price so as to fully cover all costs thereby making it unattractive for private sector participation. Also the provisions of infrastructure usually involve high upfront costs and long payback periods and the private investor is often unable to provide the large initial capital required and is not capable of obtaining matching long-term finance. Finally cross subsidization, which forms an important part of infrastructure provision, is easier done by public sector than the private.


1] For C.A. economics H.L. Ahuja 2] Reserve bank of 3]


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