What are the challenges for Banking sector in the future?

I mean this is the challenge for the Banking sector at the moment as they are not able to pursue everybody in this regard, I mean everybody should get on board like, government local authorities, banks, payment gateway, mobile companies and build infrastructure to facilitate financial inclusion.  Ability to get consensus from all the stakeholders for consolidation in banking sector, which will require pursuing all stakeholders.

And in future banks should make financial inclusion the mantra for sustaining equitable growth. And this will propel faster growth, which can act as deterrent against social unrest and promote growth at the lowest level.

I am not sure this topic is about the impact of recession on banks or something else. However there are few areas which one need to look at when it comes to banks.

1) Liquidity position: Indian banks are quite well off and never experienced any liquidity crisis in last two years.

2) Disbursment of loan to Small and Medium scale industries: Still way to go for indian banks. Even working capital loans were not been provided in many cases by large PSU and private sector banks. Here small banks came to the rescue and find a new chunck of their business.

3) Extension of credit facility: Not sure how much indian bank are going to learn from the mistakes of their large foreign counterparts

4) Consolidation of banks: Consumer will be at loss as lack of comptition in major thrust areas and foremost it will hamper the rural growth

One more thing in last couple of quarters most of the Banks were able to show profits in their books due to tresury operations. There wasn't any significant growth in banking businesses across the board. In my openion it clearifies how much attention is given to the unexplored rural india.

Banks have to compare the cost of holding more reserves(pertaining to CRR ) with the benefit of doing so. This benefit is greater the more uncertain is its net flow of deposits.So banks' lending is dependant on  it and the other factors are interest rate, the repo rate, CRR and call money market rate(market driven) e.t.c.Money multiplier is important as it indicates how much is the deposit as a % of cash reserve from where we can find out what is the increase in money supply with respect to change in monetary base.Banks' lending  depends also on other macroeconomic factors.Demands of the times are: consolidation with moderate and selective expansion, social banking with financial viability, selective modernization, mechanization and computerization,better customer service, effective managerial culture, adequate profitability, strong organization culture, internal supervision and control.

The main challenge is competence in banking, value addition in banking services, at least one smile of both the customer and banking staff at least once in whole next year i.e. "2010?"

Changes in age profile & household income, customers will increasingly demand the enhanced institutional capabilities and service levels from banks.

Changes in age profile & household income, customers will increasingly demand the enhanced institutional capabilities and service levels from banks.

The global recession has impacted Banks in India also. In future Indian banks should work hard to lessen this impact and keep its growth rate up.

The Indian banking system, with one of the best banking networks in the world, has witnessed a series of reforms  and liberalization and the increased participation of private sector banks. The growth of the retail financial services sector has been a key development on the market front. Indian banks  have not only been keen to tap the domestic market but also to compete in the global market place. New foreign banks have been equally keen to gain a foothold in the Indian market. The sector will need to step up the momentum in of its demand for credit to fund its expansion plans, grow in retail banking. However, even as there are some issues and challenges that Indian banks will have to contend with if they are to emerge successful in the long term. Also Consolidate, expand  Overseas, reduce non performing assets, have effective Skilled manpower , adopt new technologies, bring in consumer protection. 

I mean we all know how the whole world was struggling with recession and banks were the main cause behind it, but then India survived the Financial crisis much better than the developed nations but then it affected its businesses and future propositions for that matter, and the challenge will be like how the recovery will happen, and for banks the biggest concern now is how the recovery shapes up. And people are already worrying that it may be a W-shape recovery instead of U or V. And if it is actually W-shape, then it’s a nightmare again for banks. So how the recovery shapes up is also very important in this regard and a major challenge for banks in the coming days.

By consolidation, attention is drawn towards the much talked about merging of SBI and other family players. Some activity may also be seen in pvt. banks. This is required to yield economies of scale and lower cost of money.

Rurual India still seems to be inactive, specifically in the financial services segment. Why should the rural population be pitched about savings and loan schemes. I think it's time to involve them in the market instruments and newer products. Use of ATM and net banking can further bring down cost of ops.

'Virtual banking' is going to be the mantra of future banking operations in India. When such a system is exist in Indian Banking system, the most important challenge that will be confronted by the banks are to provide 'secure banking' for their customers. Providing 'secure banking' means, banks performing at a rate of 99.999666 % in their customer satisfaction ( i.e 6 sigma level has to be maintained). To achieve such a result, nearly 100% transaction occuring through any Indian bank sources need to be well secured, be it when customer transacting using an ATM or INTERNET or MOBILE banking.

Banking companies are planning to go for global business, that is the greatest challenges for Indian based banking companies, Government is planning and already initiated for mergers and amalgamations among State Bank groups by introducing a bill to amend the law. By the introduction of this new law, State Bank of India will be able to moove towards mergers and aquisitions among State Bank groups and other other banks to become a global competitor, and to do the banking business at global standered in India. By this the State Bank of India will be better equipped to compete with global gaints in the banking sector.