The future of banking

The future of banking

Prospects and Perils | The future rests on three pillars

By Tamal Bandyopadhyay

She hadn’t yet qualified for the course and didn’t know whether she would make it. She had done reasonably well at the Graduate Management Admission Test (GMAT) and after choosing ISB, dropped in at the local branch of a public sector bank in the western Mumbai suburb where she lives. The branch manager gave her a patient hearing and promised to finance her expenses up to 8 lakh if her mother was willing to provide adequate collateral. She would also have to give an undertaking promising to return the money after she gets her first job. (Click here to read full report)

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Human Resources | The path for reforms in PSBs

By Anil K. Khandelwal

Overall, the banks have performed well, reducing non-performing assets (NPAs) and strengthening balance sheets. (Click here to read full report)

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Inflation | Decoding the dynamics

By Deepak Mohanty

Going by any measure of inflation, India comes out as a moderate inflation country, though occasionally inflation crossed into the double-digit territory. The historical average long term inflation rate was around 7.5%. (Click here to read full report)

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The urban banking model cannot work in rural areas

By N. Vaghul

Retail banking in India started decades ago, but why are banks still making losses?

I don’t think banks are making losses in retail lending. Home loans and auto loans are very profitable, although I am not very sure if two-wheeler loans are holding up good. There are some problems with unsecured lending. What banks are now trying to do is to get out of the unsecured lending business, the losses are mounting up there. So it is understandable that banks are exercising a greater degree of selectivity while extending unsecured loans. (Click here to read full interview)

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Financial Inclusion | A road India needs to travel

By K.C. Chakrabarty

Unrestrained access to public goods and services is an essential condition of an open and efficient society. It is argued that as banking services are in the nature of a public good, it is essential that the availability of banking services to the entire population without discrimination is the prime objective of public policy. Expectations of poor people from the financial system is security and safety of deposits, low transaction costs, convenient operating time, minimum paper work, frequent deposits, and quick and easy access to credit and other products, including remittances suitable to their income and consumption. (Click here to read full report)

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Monetary Policy | Key factors shaping trajectory

By Subir Gokarn

However, the context in which these objectives are pursued obviously changes over time. In my view, there are three key factors that are playing an important role in the current Indian context. Each of them has a bearing on both the monetary stance and the strength of the monetary transmission process. (Click here to read full report)

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Derivatives | Cautious approach to innovation

One of the key reasons why the Indian financial system was not affected by the 2008 global meltdown was the banking regulator’s conservatism. The central bank ring-fenced the Indian banking system by imposing stringent criteria on various instruments, including trades in permitted derivative products, and deferring the introduction of others, one of which was blamed for sinking large global financial institutions. (Click here to read full report)

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Retail banking | Opportunity lies in technology

Anurag Thakur is a changed man. Gone are the days of late-night parties, dinners in fancy restaurants and holidays twice a year. Reason? He cannot borrow as freely as he could three years ago. In 2009, as Indian lenders faced the risk of defaults in products such as credit cards and personal loans, they squeezed credit lines to people like Thakur. His grace period was curtailed and credit limit shrunk as banks became wary of lending unsecured loans. (Click here to read full report )

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Microfinance | Weighing growth, vulnerabilities

Till recently, India’s Rs20,000 crore microfinance industry had a great run, growing at a scorching pace and being chased by private equity investors. SKS Microfinance Ltd, the largest of them, tapped the capital markets in a successful initial share sale in 2010, signalling the acceptance of the industry by investors. (Click here to read full report )

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Financial sector reforms | Meeting growing requirements

By Narendra Jadhav