1273661, Varun Sood, F2, Q44. Are Indian banks are sufficiently capital equipped?

 Are Indian banks are sufficiently capital equipped?

Introduction:       In india banking industry has the potential to become the fifth largest banking industry in the world by 2020 and the third largest by 2025, according to an industry report. The face of Indian banking has changed over the years. Banks are now reaching out to the masses with technology to facilitate greater ease of communication, and transactions are carried out through the Internet and mobile devices.  Banking Industry in India functions under the sunshade of Reserve Bank of India - the regulatory,

central bank. Banking Industry mainly consists of:

• Commercial Banks

• Co-operative Banks

The commercial banking structure in India consists of: Scheduled Commercial Banks

Unscheduled Bank. Scheduled commercial Banks constitute those banks which have been

included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934.

RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section on 42 (60) of the Act. Some co-operative banks are scheduled commercial banks although not all co-operative banks are. Being a part of the second schedule confers some benefits to the bank in terms of access to accommodation by RBI during the times of liquidity constraints. At the same time, however, this status also subjects the bank certain conditions and obligation towards

Discussion:

The business of banking is not that simple anymore. We are living in an increasingly difficult environment where uncertainty is the name of the game.

The banking industry is central to any economy. And thus regulation of this industry is crucial as well. The RBI has done a commendable job so far in regulating the industry. While global banks, and economies are still recovering from the aftermath of the 'subprime crisis' and 'euro zone' debt crisis, Indian banks have stayed relatively strong. They came off the crisis relatively unscathed. However, the rising interest rate scenario currently may be more of a challenge. Without sufficient capital to grow and meet capital adequacy and provision norms Indian banks may face some issues. Especially, ones which do not have enough equity set aside to absorb the same. Without capital no business can survive. So capital is important for banks. So, for these a regulatory body of bank who take care of Indian banking industry is RBI, so RBI will declare monetary policy twice in year i.e repo rate, reverse repo rate and crr. In india lending is more as compare to other countries. “Indian banking system is under pressure of rising bad loans and restructured advances, while the economic slowdown has impacted the cash flows of companies, which has contributed to the pressure in the financial system.”It has some advantages i.e technological development, Higher standard of living,increase in purchasing power, export increases.

Conclusion:

From my point of view discusses the various challenges and opportunities like rural market, transparency, customer expectations, management of risks, growth in banking sector, human factor, globa lbanking, environmental concern, social, ethical issues, employee and customer retentions. Banks are striving to combat the competition. The competition from global banks and technological

innovation has compelled the banks to rethink their policies and strategies.In india Public sector banks faces tough competition from private banks. So Public sector banks will open its branches more and more. In Indian banking new concept that is single window service that is opened to and ICICI banks have introduced TAB banking where customers do not require to go bank branch they opened their account directly from home.