The year 1990 ushered in financial and banking sector reforms in India. The main reason behind the introduction of reforms was the deteriorating financial health and the sub-standard performance of public sector banks which till then almost enjoyed a monopoly position. The only noticeable feature was the spread of their physical branches in every nook and corner of India. These banks were not only burdened with rising Non-Performing Assets (NPAs) but also scored low in terms of customer service and the usage of Information Technology (IT) while carrying out banking operations. Soon after the liberalization of the Indian economy, banks began to enter into the realm of financial services. The beginning of the 1990s witnessed the structural modifications of fundamental magnitude in global banking systems. Large scale mergers, amalgamations and acquisitions between the banks and financial institutions helped them in their growth due to their sheer size and financial strengths of the merged entities.

Thus, in recent times, the newly developed financial conglomerates could maximize economies of scale and scope by extending all the financial services under a single umbrella. Private and foreign banks have entered India in a big way and have introduced an element of competition riding on the wave of technology and customer service. By making use of cutting-edge technology, these banks have reduced the number of physical branches and the associated overhead costs thereby, increasing the volume of business and profits.

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