Role of private banking in indian economy in points
Answers
Answer:ABSTRACT:
In 1969, the Banks were nationalized by the then G
ovt. of India. This step has changed the paradigm s
hift of
priority sector of banks from Class banking to Mass
Banking. The Banking should reach to poor sector o
f the society.
The 14 Indian commercial banks in private sector we
re nationalized in July 1969 and some others therea
fter were not
sufficient for Inclusive Financial Growth and to ex
tend credit to the rural and urban poor. Micro fina
ncing is one of the
important tools for inclusive growth. The Banks lik
e ICICI bank are trying to collaborate their servic
es with Self Help
Group in order to extend credit to these groups. Al
ong with private banks the leading foreign commerci
al banks like
Citibank, HSBC and the Standard Chartered Bank are
also looking for the business in rural India. The B
anks presently
are moving on the line of Agent base model than bra
nch base model. This helps banks to operate with ec
onomy. The
banks are now introducing mobile based services con
cept for the rural sector also to reach to the rura
l customers
directly. The economic reforms implemented from 199
0 must be linked with the structural financial inst
itution where
private sector banks have to play very important ro
le. Capital adequacy norms, product innovation, use
of modern
technology, risk management, skill and efficiency o
f Human resources, application of corporate governa
nce, CRM,
customer orientation, asset management are some of
the challenges emerged which are to be focused by t
he private
sector banks. Thus in the developing economy like o
urs the private sector banks will help country grow
and prosper.
The cost reduction techniques and application of mo
dern technology will help the growth of private ban
king sector.
Key words:
Class banking, Mass Banking, Structured financial i
nstitutions, stiff competition, Product innovation,
Customer Relations Management, Economic Reforms,
INTRODUCTION
“In 1969, the Banks were nationalized by the then
Govt. of India. This step has changed the paradigm
shift of
priority sector of banks from Class banking to Mass
Banking. The Banking should reach to poor sector o
f the society.
The 14 Indian commercial banks in private sector we
re nationalized in July 1969 and some others therea
fter were not
sufficient for Inclusive Financial Growth and to ex
tend credit to the rural and urban poor. Accordingl
y private banking
sector entered into banking scenario for further fi
nancial growth. The inclusion of weaker section of
the society in
financial aspects shall be the top priority of Indi
an economy. Merely nationalized or cooperative sect
or banking cannot
help to serve this purpose. Accordingly private sec
tor banks have to play vital role in the developmen
t of Indian
economy like ours. Presently the private sector Ban
ks are working only in Urban or Semi urban areas bu
t if they need
to hold and sustain the business it is important fo
r them to go to the rural Indian sector. The large
number of excluded
group from structural financial institutions such a
s poor and unprivileged sector is an opportunity fo
r banking
business. The Banks must draft their strategies and
policies suited to reach to the excluded customers
from banking
arena. The need base banking produces will help to
increase contribution of private sector banks in th
e Indian banking
scenario. Technology and expertise is not the probl
em for Indian banking sector and especially for the
private banking
sector. it must be properly concentrated.
The private sector banks are subject to the provis
ions of the banking Regulation Act, 1949. The publi
c sector
banks are governed by their respective funding stat
us and by those provisions of Banking Regulation Ac
t, which is
specifically applicable for them only. The Urban Co
operative Banks on the other hand are governed by t
he provisions
of cooperative societies Act of the respective stat
es and certain provisions of Banking Regulation Act
are also
applicable to them. The Banking sector policies int
roduced by the Govt. of India help to promote Pvt.
Banking in
IndiaAnswer:
Explanation: