The term globalization connotes enhanced connectivity among people across the national borders. The nature and pace of globalization depends on the combined effect of technology and the public policy both at the national and international levels. With the growing integration of economies and the markets around the world, global banking has arrived and is here to stay. Globalization will get further fillip with the opening up of financial services under WTO. India, being one of the signatories of financial services agreement of 1997, is poised to expand the reach of its financial services, including banking, on a reciprocal basis to many countries.
The process of globalization will increase the presence of international players in the banking arena in India. Similarly, some of the Indian banks will become global players. So, the banks will perforce spread their net beyond borders in their quest for new markets, customers and profit. Against this backdrop, banks in India must not only prepare themselves to retain business back home but also to capture business in hitherto-unexplored markets by competing with their global counterparts. Size is not the only problem.
Indian banks are considered to be lacking in necessary products, skill sets on the part of their human resources and risk-taking. The implementation of Basel II norms in right earnest is, therefore, critical for Indian banks seeking an international presence. It is felt that top international banks will enjoy lesser capital requirements on the back of their superior risk management practices. This will enable them to price their products aggressively when compared to the banks in India. |
