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The Indian Banking Industry itself is a huge history, it covers all the banking practices that were traditionally awarded by the Britishers. The time flies so fast that the nationalization of the banking system changed to their privatization and at times like today it has changed with the increase of the foreign banks in India. It has been a very long journey for the banking industry of the country as new changes with time can be seen with every high and low that comes into the industry.
The Indian Banking Industry
There is a change in the dynamics of the banking system that can bring new exposure to the risks that a business could face. That is the reason that technological use has brought a different type of revolution to the working systems of the bank. If we compare today’s system with the system that used to run in the old times.
With time any sector that seeks progress also has a very high possibility of facing different kinds of challenges and opportunities along the way, the same has happened with the Banking industry of India. The earliest bank that was set up in the country was in 1870, “The Bank of Hindustan”. Later in the upcoming years, more banks were set up. These were the presidency banks under the Act “Presidency Bank Act 1876”. The Reserve Bank of India was set up in India in the year 1934, also it has been constituted that it is an apex body that will function without the major ownership of the Government of India. In the year 1955, the RBI took complete control of the Imperial Bank of India, and then renamed it the “State Bank of India”. Soon the State Bank of India took control over 8 different private banks from the princely states and by the year 1960, the RBI was forced to merge the weaker banks with the stronger banks.
Challenges
During the development years of the Indian banking industry, it is obvious that it would have experienced different levels of problems, and risks and you must have seen an increase in the level of competition. All these developments and problems that took place have also shown their adverse consequences that have brought loopholes in the system and resulted in the malfunctioning of the industry in the past. Some of the issues that are faced by the banking system of the country are given below:
- Although, there has been an increase of smaller branches of the banks in the rural areas. But the problem is the lack of technical enhancement and important services which are available in the bigger cities are not available for rural branches
- There are severe concerns regarding the practices in the banking industry which are related to the customer service as the banks are expected to give fair treatment to all of their customers and properly attend to every one of them so that they can easily trust the system with their assets
- With the constant increase process of globalization in the economy of the country, the banks are faced with an intense competitive environment that makes it imperative for the banks to enhance their systems
- The timely technological up-gradation has brought up intense competition in the Indian banking sector. It has been indispensable for all the banks with new technology and needs up-gradation in their services
Opportunities
Every problem or advancement brings a chance for the system to improve and gives them an opportunity so they could learn and excel in their field. Some of the opportunities that are in the Banking System are:
- An impactful growth in the economy of the country.
- The increase in client borrowing.
- Number of increases in the branches of banks in different areas of the country.
- The deregulation of the banking system.
- Large checking of the customer account balances.
- The increment in the supply of money.
Conclusion
As has been mentioned above, the Indian banking industry has developed a lot since the first bank was set up in the country in 1870 – the Bank of Hindustan. Later on, there have been many developments in this field that have also upgraded the system, and on the same hand brought up so many challenges and loopholes in them too.
