Indian banking sector is undergoing radical changes. It is evolving in terms of technological upgradation, reduced NPAs, adoption of international standards, and becoming globally competitive. Through successful adoption of the Basel I norm it has increased its capital base and is now preparing itself for Basel II, which has three pillars, namely minimum capital requirement, supervisory review process and market discipline. Basel II is more sophisticated and calls for heavy investment in technology.
Banking is not a sprint, it is definitely a marathon and the marathon round started in the late 1980s as a global phenomena. In India, for the last one and half decades, sincere and unified efforts have been made towards global benchmarks as a result of which, the entire dynamics of the banking sector has undergone radical changes. Indian banking is no longer the so-called employment and development generating machine. The competition in the sector has become stark and steep. The rules of the Indian banking game have been changing and moving towards a convergence with the international norms/standards. Banks are now more concerned about increasing the spread, reducing cost, reducing assets and liabilities mismatch, improving asset quality, improving capital base, strengthening technology base, accelerating profit and exploring innovative areas/methods for income generation and sharpening their edge so as to fight with the Roman Gladiators in the form of New Generation Banks and foreign counterparts. One important area, which has been focused since 1988, is the Capital Adequacy Ratio (CAR) and increasing capital base. |
