In deregulation era, banks in India have an opportunity to develop more pragmatic strategies to enhance their profit earning capabilities. Banks now enjoy the freedom to fix the prices of their products and services as there is no longer any statutory administered pricing system.

In today's market driven economy, customers demand for value and price is a significant component of the value package. Banks therefore should develop a pricing strategy for their products and services based on value package they create in their products and services, besides keeping in view the cost of production and/or service to be provided to consumers in the market.

A healthy environment for pricing is open and transparent market. It is also necessary to have adequate database and information system. It is often seen that detail information platform does not exist due to lack of interest and also non application of sophisticated information technology. In fact, data base has to be created institutionally as well as at national and international level.

The first strategy is called `stand-alone approach'. Stand- alone pricing equation is designed with a strategy of maximizing behavioral attitude. For example, pricing method based on some restrictive assumptions like interest rate margins. It aims that a bank aiming to maximize its profits should set the rate payable on an asset .This model is based on the assumption that loan rate is equal to market rate/loan rate as determined by the stand-alone method and market power which measures the extent to which loan rate can be raised without losing business.

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