Brazil, one of the biggest de- mocracies in the world, with a population of about 20 crores, is bracketed along with Russia, India and China (popularly called BRIC Economies) for its potential for high growth in Gross Domestic Product (GDP). However, Brazil has been facing economic boom and bust phases and containment of high inflation is its major challenge. This biggest economy of Latin America has good natural resources and is self-sufficient in crude oil. It is considered as an economy in transition. The year 1990 may be considered to be very important for Brazil as significant economic reforms were initiated during this year.
The Brazilian banking system has a place of primacy in the country's financial system. Following the reform called REAL plan of 1994, the banking sector has acquired significant level of efficiency. (Real is the currency of Brazil and it is under managed float system now).The Brazilian banking system is dominated by the domestic banks, which occupy five places out of the top 10 slots in terms of total assets. These top banks account for 70% of the assets. Brazilian banks generally operate in niche segments either in terms of regions or products. While foreign banks focus on corporate banking, domestic banks thrive on retail banking with accent on relationship banking and cross-selling. Major domestic banks may be classified as universal banks as they do provide products and services in insurance, equities and bonds. While there are 165 banks in Brazil following the phase of consolidation, it is generally considered as underserved as there is scope for opening of about 90 more banks. Only 30% of the population has access to formal financial products and services. The share of domestic banks is 78%, while foreign banks account for 22%.
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