While repairing the cleft in the Indian banking sys- tem, the reforms initiated over the decade have strengthened the fundamentals of the Indian banking sector and have transformed the operating environment for banks. One of the major reforms was the opening of the sector to foreign players. This dragged some foreign players like UBS, Dresdner and United Overseas Bank into the industry. Considering India to be one of the top markets, some other big players like Credit Suisse, Rabo Group and ANZ are also keen to obtain license to operate in India. The proposal of further relaxation to foreign players is on the anvil of 2^nd phase of reforms, expected to see light in April 2009. The year 2009 is also crucial as the Reserve Bank of India (RBI) has come out with the final guidelines for the adoption of Basel II norms by the scheduled commercial banks by March 2009. All these forthcoming changes are expected to bring about a paradigm shift in the industry giving it a scope to capitalize on the increasing global opportunities for future growth.

It is a well-known fact that global opportunities also bring some global hazards. As the leading economies around the world are falling prey to the ongoing financial crisis, India cannot escape from such turmoil. The crisis sparked off by Lehman Brothers and Merrill Lynch due to subprime lending made the global stock and commodity market reeling under it. The falling sensex and the squeezed employment market consequent to the Wall Street tsunami made a dent in Indian economy too. Though the impact of this economic catastrophe is limited mainly to three areasstock markets, real estate and outsourcing, certain Indian banks like ICICI had a tough time due to their exposure to these Wall Street giants. However, most of the banks that had little exposure, thanks to India's strong regulatory system, were spared from the tentacles of the US crisis. This enabled the industry to carve a place for itself away from the blaze of the global banking crisis. But it will be imprudent to let the industry drown in the dream of being `safe and secured'. Thus, Indian banking system, to make itself fit for adopting best practices followed internationally, must incorporate changes because not adopting those standards may prove to be very dear.

Professional Banker Magazine, Financial sector, Indian Banking System, Reserve Bank of India , RBI, Financial Crisis, US Crisis, Corporate Governance, World Trade Organization, WTO, Risk Management Committee, Economic Value added , EVA, Market Value-Added, MVA, Information system.