deals with the problems facing the banking sector in India and the possible solutions and strategies for survival

1. Challenges before the Banking Sector in India-B.V.Raghunandan, SVS College, Bantwal UGC Sponsored State Level Conference, St.Philomena College, Puttur October 12, 2010

2. Indian Banking Sector: Evolving an Identity Nationalisation of 1970s and Priority Sector Liberalisation of 1990s Technology Absorption from 1995 Social Sector and Microfinance Technology driven Inclusive Development Misadventure of 2008 with Exotic Derivatives

3. Challenges before Banking Sector Basel & Capital Adequacy Norms Establishing Market Friendly Image Increasing Role of Insurance Companies Training the HR Upgrading Technology Content Balance Sheet Planning Developing Agriculture Friendly Financing Schemes and Inclusive Finance

4. Basel & Capital Adequacy Linkage of loans with Tier I Capital Sound and Logical, but has operational problems Increasing the deposits is a day to day affair Increasing Tier I capital can not be a day to day affair It will push the banks into the control of Insurance Companies Fresh Capital for Private Banks Recapitalisation of Public Sector Banks

5. Establishing Market Friendly Image Stock Market is one more master Quarterly Reporting calls for consistent performance Need to satisfy market analysts Increasing cost of funds Profits can accrue through agency services and financial services

6. Increasing Role of Insurance Companies Insurance Companies taking a stake in Indian Banks Playing a dominant role in policy making Insurance products compete with banking products Banking products may take a back seat Deposits increase loans which need more capital, agency services bring in income without any complications

7. Training the HR Technology Alien HR Training is imparted to irrelevant people rather than important people Branch Heads are more concerned about day to day management rather than achieving a long range corporate goal Need to have a more intensive and comprehensive training programme Campus selection and recruitment

8. Upgrading Technology Content Pretty bad shape of technology absorption Need to spend heavily on updating, power support and maintenance to avoid branch work coming to a standstill A BPO as a subsidiary both for captive usage and contributing to profitability More money spent on UPS and network administrationBalance Sheet Planning

9. Balance Sheet Planning Each component decides another item CRR establishes relation between deposits and balance with RBI SLR decides the relation between time liability and investment Deposits decide the loans Loans decide the Tier I capital as per Basel

10. Developing Agriculture Friendly Financing Schemes and Inclusive Finance RBI’s insistence on rural finance and agricultural finance Microfinance Training the entrepreneurs in rural areas International funds moving to agriculture Need to develop financing schemes for commercial or corporate agriculture

11. Other Challenges Credit Rating Credit Information Minimising NPA Providing financial services Managing size Evolving a suitable business model

12. THANK YOU