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AN OVERVIEW OF BANKING INDUSTRY

Banking system plays a very significant role in the economy of a country. It is central
to a nation’s economy as it caters to the needs of credit for all the sections of the
society. Money-lending in one form or the other has evolved along with the history of
mankind. Even in the ancient times, there are references to the money-lenders, in the
form of sahukars and zamindars who lend money by mortgaging the land property of
the borrowers.
The Indian banking system consists of 27 public sector banks, 21 private sector banks,
49 foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384
rural cooperative banks, in addition to cooperative credit institutions.
As of Q2 FY19@ total credit extended by commercial banks surged to Rs 90,579.89
billion (US$ 1,290.68 billion) and deposits grew to Rs 118,501.82 billion
(US$ 1,688.54 billion). Assets of public sector banks stood at US$ 1,557.04 billion in
FY18.
Indian banks are increasingly focusing on adopting integrated approach to risk
management. Banks have already embraced the international banking supervision
accord of Basel II, and majority of the banks already meet capital requirements of
Basel III, which has a deadline of March 31, 2019.
Reserve Bank of India (RBI) has decided to set up Public Credit Registry (PCR) an
extensive database of credit information which is accessible to all stakeholders. The
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed
and is expected to strengthen the banking sector.
Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY) increased to Rs 892.58
billion (US$ 12.37 billion) and 341.4 million accounts were opened in India^. As of
December 10, 2018, the total number of subscribers was 13.35 million, under Atal
Pension Yojna.
Rising incomes are expected to enhance the need for banking services in rural areas
and therefore drive the growth of the sector. As of September 2018, Department of
Financial Services (DFS), Ministry of Finance and National Informatics Centre (NIC)
launched Jan Dhan Darshak as a part of financial inclusion initiative. It is a mobile
app to help people locate financial services in India.
The digital payments revolution will trigger massive changes in the way credit is
disbursed in India. Debit cards have radically replaced credit cards as the preferred
payment mode in India, after demonetisation.
The future may well see an increased extent and variety of the bundling of financial
services as techniques and technologies of securitization, networking, and outsourcing
offer new organizational possibilities. The result thus far has been a blurring of the
traditional distinctions between banking and non-banking financial activity. Bank
mergers and mergers of banks with other financial firms are occurring with increasing
frequency and magnitude, suggesting that the future may well witness both a greater
dominance of universal banking structures and a greater international concentration of
financial assets.