As we know, banks expand their strategies for giving their customers the access to their accounts through various services like internet banking, mobile banking etc., they should also deem this emerging podium as a budding catalyst for engendering operational efficiencies & as a vehicle for new revenue sources.
Challenges faced by Indian Banks
The banking sector in India has made quick strides in restructuring & aligning itself to the new gung ho business environment. One of the major challenges that Indian banks are facing today is how to cope with competitive forces in order to strengthen their balance sheet. Nowadays, banks are whimpering with the burden of Non Performing Assets. It is truly felt that these debts, if not recovered, will eat into the very vitals of banks.
1. High transaction costs
High transaction cost of carrying non- performing assets in the books is the major concern of the Indian bank. The development led to strains in the operational efficiency & the accumulation of non-performing assets in loan portfolios.
2. Revolution of Information Technology
Banks in India are subject to great pressures to perform or else their very survival would be in jeopardy. The application of Information Technology & e-banking is becoming the order of the day with the banking system directing towards virtual banking.
3. Timely technological upgradation
In order to face competition, it is indispensable for Indian banks to soak up the technology & upgrade their services.
4. Intense Competition
The Reserve Bank of India & Indian Government kept banking industry unbolted for the participants of foreign banks and private sector banks. The foreign banks were also allowed to set up shop in India. Many new players have entered the market such as foreign banks, private banks, non - banking finance companies, etc. For growth and survival in the environment of cut throat competition banks have to follow the prompt and resourceful customer service, which calls for suitable customer centric policies & customer friendly procedures.
Privacy and Safety
The areas which might imperil security in e banking can be:
• Credit risk
• Liquidity, market risks, interest rate risk
• Legal risk
Opportunities of Banking industry
• A growing economy
• Banking deregulation
• Increased client borrowing
• An increase in the number of banks
• An increase in the money supply
• Low government-set credit rates
• Larger customer checking account balances
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