Recent Trends in Indian Financial Services Industry
Emeritus Professor- AICTE, Department of Management Studies, V.H.N.S.N. College, Virudhunagar
Abstract - 'Finance is the life blood of business' and 'Finance is the wheel of industry' - go the rhetoric emphasizing the key role of finance. In fact, finance pervades into other areas of business like production and marketing - to keep the business going: such is the importance of finance. Amid this backdrop, the present paper brings to focus recent trends in financial services sector in India.
1. INTRODUCTION In India, the onset of globalization in July1991, changed the financial scenes in the realms of banking, insurance and Mutual fund. 1.1 Commercial banks A landmark was registered in the Indian banking sector when the major banks were nationalized in 1969.Though nationalization was enforced as a flashy political gimmickry by the then government at the centre, its real gain was reaped by the citizens of India only in 2009-when the banks of developed nations tumbled down, the Indian banks stood strong- there was no public panic at all at the time of global financial crisis which shook the world during 2008-2009. 1.2 Banks' technology driven services Marketing is an essential economic factor not only for production but also for research and development. Peter Drucker has aptly remarked a business firm has really two functions only, namely, marketing and innovation. It is very relevant for banking industry, which in India has undergone sea changes, thanks to the advent of technology, competition brought through foreign banks, emergence of new private banks and changes in regulations. With more and more players expected in the field, banks have to adapt to the new trend. Concerted efforts have been made by banks to improve customer service. The most important 196
ones relate to the advent of technology - ATMS, telebanking, internet banking- banks have adopted latest information technology to cater to the needs of customers. For example, in a shared payment network system (SPNS), a customer of one bank can use his ATM card at another bank's ATM, both being in the same network. Banks have opened specialized branches like industrial finance, MSME and NRI branches in order to provide personalized services. Besides, they have set up grievance redressal cells at major centers to redress customers' grievances. 1.3 Cross Selling Recently, in retail banking business, the concept of cross selling has been introduced. If a bank sells an asset product (housing/car/ educational loan) to its account holder, it is cross selling. The cross selling enhances customer's loyalty. Banks have entered into the field of housing loan. Housing loan rates are being slashed. The aggression by the banks in this field is noticeable. The rate war triggered by SBI has prompted other banks to lower their rates.SBI, UBI, PSB along with LIC and HFC have special offer of loan at 8% to 8.5% 1.4 Educational Loan A salient feature in recent trend in bank finance is education loan. Education loans amounting to Rs24,000 crore had been disbursed to 16 lakh students across the country till march, 2009; and it is expected that the education loan may touch Rs50,000 crore by 2015. The Central Government has decided not to charge interest on education loan granted to those whose family income is less than Rs4.5 lakh per annum. This will come into force during the current academic year.
R.Neelamegam - Recent Trends in Indian Financial Services Industry
2. REGIONAL RURAL BANKS (RRBS) Ours is an agricultural economy .The Father of the Nation rightly said that India lives in villages. Still there are lakhs of villages where 60 crore people live. Against this backdrop, the establishment of Regional Rural Bank in India is a landmark in the Indian Banking History. The main objective of RRB is to provide...