Impact of WTO commitments on Indian banking Industry
Faculty – Banking and Finance, Bangalore Management Academy (BMA).
Naman Kumar Gupta, MPFB II, Bangalore Management Academy (BMA) Kartheek Yerolla, MPFB II, Bangalore Management Academy (BMA) Mahesh Bondili, MPFB II, Bangalore Management Academy (BMA)
India had a deep rooted and well structured banking system since independence. After nationalization of the banks, the focus of the Indian banking System has been two fold - commercial and social. While meeting their commercial considerations like profitability, viability of operations and financial stability the banks have also been focusing on social considerations like poverty alleviation, employment generation, balanced regional growth and such others. However, on account of economic liberalization in 1991 and the need to adhere to various prudential norms laid down by the Basel committee, the focus of Indian banks has been predominantly on the commercial aspects of banking. In 1997, India has made certain commitments to the WTO in providing market access to the foreign banks that intend to operate in India. These commitments would assume operational character in 2009. As the banking industry has been at the forefront of Indian economic resurgence, the WTO commitments have become a matter of concern to many sections and sectors of our economy.
The purpose of this paper is to provide a proper perspective on the impact of WTO commitments. Firstly, this paper would deal with exact nature of commitments made by India to WTO regarding the banking industry. Secondly, this paper seeks to evaluate the impact of foreign banks on the Indian economy. Thirdly, this paper seeks to highlight the major issues and challenges that Indian banking system would encounter if they have to effectively compete with foreign banks. Fourthly, this paper attempts to lay down a time bound road map...