The banking industry has undergone a sea change in recent times. While the banking system has done fairly well in adjusting to the new market dynamics, greater challenges and competition lie ahead.

Competition is the buzzword in the banking sector. Healthy competition pushes the banks to a higher growth trajectory. In India, banks function under a sound and efficient regulatory and supervisory environment. Limited by this control, banks play their crucial role in the economic development of the nation. Consequent to the banking sector reforms, initiated in the early 1990s, the Indian banking scenario witnessed a remarkable transformation in its function and gradually braced a paradigm shift to innovative and competitive technology-based environment.

The day of traditional banking is now over. The banking industry has undergone a sea change. Private banks and foreign banks have gradually made their inroads and stiff competition posed by them has made this happen. The pace of transformation has been more significant in recent times, with technology acting as a catalyst. While the banking system has done fairly well in adjusting to the new market dynamics, greater challenges and competition lie ahead.

Healthy competition among the banks contribute to the growth of the economy. After nationalization, banks have ushered in a new era of competition for growth. The stress was on balance sheet sizeincrease in deposits and loans, driven primarily by expansion of branches. Branches were opened in unbanked far-flung areas for ameliorating the economic condition of the downtrodden and neglected sections of the economy.

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