banking sector essay introduction

• Argumentative
• Ecocriticism
• Informative
• Explicatory
• Illustrative
• Problem Solution
• Interpretive
• Music Analysis
• Entertainment
• Law, Crime & Punishment
• Artificial Intelligence
• Environment
• Geography & Travel
• Government & Politics
• Nursing & Health
• Information Science and Technology

Introduction of Banking Sector

The banking sector serves as the backbone of the global economy, playing a pivotal role in facilitating financial transactions, allocating capital, and driving economic growth. It encompasses a diverse range of financial institutions, including commercial banks, investment banks, central banks, and credit unions, each serving specific functions within the financial system. Understanding the structure, functions, and significance of the banking sector is essential for comprehending its contributions to economic development and stability.

At its core, the banking sector serves as intermediaries between depositors and borrowers, mobilizing funds from individuals and businesses with surplus funds and channeling them towards those in need of capital for various purposes, such as investment, consumption, or business expansion. Commercial banks, the most recognizable entities within the banking sector, offer a wide array of financial services, including savings and checking accounts, loans, mortgages, and credit cards, catering to the diverse needs of customers. Investment banks, on the other hand, focus on facilitating capital raising activities, mergers and acquisitions, and financial advisory services for corporations and institutional clients.

Central banks, as the apex institutions of the banking sector, are responsible for regulating monetary policy, overseeing the stability of the financial system, and maintaining price stability within the economy. Through tools such as interest rate adjustments, open market operations, and reserve requirements, central banks influence the money supply, inflation rates, and overall economic activity, aiming to achieve macroeconomic objectives such as full employment and stable prices. Moreover, central banks act as lenders of last resort, providing liquidity support to financial institutions during times of crisis to prevent systemic disruptions and ensure financial stability.

The banking sector's significance extends beyond financial intermediation to fostering economic development, promoting financial inclusion, and enhancing societal welfare. By allocating capital efficiently, banks contribute to investment, innovation, and entrepreneurship, driving productivity gains and long-term economic growth. Additionally, access to banking services, such as savings accounts, credit facilities, and insurance products, enables individuals and businesses to manage risks, accumulate wealth, and pursue socioeconomic advancement. Furthermore, banks play a critical role in fostering financial stability and resilience, safeguarding against systemic risks, and mitigating the adverse effects of economic downturns.

In conclusion, the banking sector serves as a cornerstone of the modern economy, facilitating financial transactions, allocating capital, and supporting economic development. With its diverse array of financial institutions and functions, the banking sector plays a vital role in maintaining financial stability, fostering innovation, and enhancing societal well-being. Understanding the structure, functions, and significance of the banking sector is essential for policymakers, investors, and the general public to navigate the complexities of the global financial system and harness its potential for sustainable economic growth and prosperity.

Related Essays

• Netflix Business Case Study
• Crisis Management Plan Essay
• Compuco's Global NPD Strategy and Organizational Capabilities: An Analysis and Recommendations
• Organizational Dialogue : Theory And Practice
• Media and Its Responsibilities Essay

Related Essays on Business

Advantages And Disadvantages Of Consultants

Consultants play a vital role in today's business landscape, offering their expertise and insights to help organizations navigate complex challenges and achieve their goals. However, like any business strategy, employing consultants comes with its own set of advantages and disadvantages. One of the primary advantages of hiring consultants is the access to specialized knowledge and skills that they bring to the table. Consultants are often experts in their respective fields, with years of experience and training in specific areas such as management, finance, marketing, or technology. This expertise can be invaluable to companies looking to address specific issues or implement new initiatives without having to invest in extensive training or hiring new full-time employees. By tapping into the knowledge of consultants, organizations can gain a competitive edge and stay ahead of the curve in their industry. Additionally, consultants offer an external perspective that can help organizations identify blind spots and uncover new opportunities. Because consultants are not directly involved in the day-to-day operations of a business, they can provide unbiased insights and recommendations that internal teams may overlook. This fresh perspective can lead to innovative solutions and help companies adapt to changing market conditions more effectively. Moreover, consultants can provide flexibility and scalability to organizations, particularly during times of transition or growth. Instead of hiring additional full-time staff to handle short-term projects or temporary spikes in workload, companies can engage consultants on a project-by-project basis. This allows businesses to access the resources they need when they need them, without the long-term commitment or overhead costs associated with hiring permanent employees. However, despite these advantages, there are also some drawbacks to using consultants. One potential disadvantage is the cost associated with hiring external expertise. Consultants often command high fees for their services, which can strain the budgets of smaller organizations or startups with limited financial resources. Additionally, there may be hidden costs such as travel expenses or unforeseen project delays that can further escalate the overall cost of engaging consultants. Another disadvantage is the potential for conflicts of interest or lack of alignment with the organization's goals and values. Since consultants work with multiple clients across various industries, there is a risk that their recommendations may not fully align with the unique needs and objectives of a particular company. This can lead to friction or misunderstandings between consultants and internal stakeholders, undermining the effectiveness of the consulting engagement. In conclusion, while consultants offer many benefits, including access to specialized expertise, external perspectives, and flexibility, it's essential for organizations to weigh these advantages against the potential drawbacks such as high costs and alignment issues. By carefully evaluating their needs and objectives, companies can make informed decisions about when and how to leverage the services of consultants to drive success and achieve their business goals....

• Corporate Social Responsibility (CSR)

Commercial Truck Brake Failure

Commercial truck brake failure poses significant risks not only to the driver of the truck but also to other motorists and pedestrians sharing the road. With the massive weight and size of commercial trucks, brake failure incidents can lead to devastating accidents resulting in property damage, severe injuries, and even fatalities. Understanding the causes of commercial truck brake failure, implementing preventive measures, and enhancing safety protocols are crucial steps in mitigating the risks associated with these incidents. One of the primary causes of commercial truck brake failure is inadequate maintenance. Commercial trucks undergo extensive use, covering long distances and carrying heavy loads, which can lead to wear and tear on brake components over time. Failure to regularly inspect and maintain brakes can result in issues such as worn brake pads, damaged brake lines, or malfunctioning brake calipers, increasing the likelihood of brake failure while on the road. Therefore, adhering to strict maintenance schedules and conducting thorough inspections can help identify potential brake problems early and prevent catastrophic accidents. Another factor contributing to commercial truck brake failure is improper loading practices. Improperly loaded cargo can affect the weight distribution of the truck, putting excessive strain on the brakes and compromising their effectiveness. For instance, unevenly distributed or overweight cargo can increase stopping distances and generate excess heat, leading to brake fade or failure. Educating truck drivers and cargo handlers on proper loading techniques, weight limits, and securing cargo can minimize the risk of brake-related accidents caused by improper loading practices. Moreover, environmental factors and driving conditions play a significant role in commercial truck brake failure. Adverse weather conditions such as heavy rain, snow, or ice can reduce traction and increase stopping distances, putting additional stress on the truck's brakes. Similarly, steep grades, downhill descents, or prolonged periods of continuous braking can overheat the brakes, leading to brake fade or loss of braking power. Employing defensive driving strategies, maintaining safe following distances, and adjusting driving behavior according to road and weather conditions are essential measures to prevent brake failure incidents in challenging environments. In conclusion, commercial truck brake failure presents serious safety concerns on our roads, with the potential for catastrophic accidents and loss of life. By addressing the root causes of brake failure, including inadequate maintenance, improper loading practices, and environmental factors, stakeholders in the transportation industry can work towards improving safety standards and reducing the risk of brake-related accidents. Implementing comprehensive maintenance programs, providing ongoing training for truck drivers, and promoting awareness of safe driving practices are essential steps in ensuring the reliability and effectiveness of commercial truck brakes, ultimately enhancing road safety for all....

• Technology Companies
• Environmental Sustainability
• Climate & Weather

Walmart: Revolutionizing Retail Walmart stands as an emblem of retail evolution, transforming the shopping landscape since its inception. Founded in 1962 by Sam Walton, the retail giant has consistently reshaped consumer experiences and market dynamics. Its impact extends far beyond merely offering goods; it symbolizes a paradigm shift in retailing, blending affordability, convenience, and innovation. From its humble beginnings in Rogers, Arkansas, Walmart has burgeoned into a global phenomenon, with a ubiquitous presence spanning thousands of stores worldwide. Its success lies not only in its expansive footprint but also in its ability to adapt to shifting consumer preferences and technological advancements. By leveraging economies of scale and pioneering supply chain efficiencies, Walmart has redefined the retail playbook, setting new standards for efficiency and affordability. At the heart of Walmart's success is its unwavering commitment to offering everyday low prices (EDLP). This pricing strategy, coupled with its vast assortment of products, has democratized access to essentials and discretionary items, making them accessible to a broad spectrum of consumers. By prioritizing cost-consciousness without compromising quality, Walmart has become synonymous with value, earning the trust and loyalty of millions of shoppers worldwide. Moreover, Walmart's foray into e-commerce has further solidified its position as a retail juggernaut. Recognizing the growing importance of digital commerce, Walmart has made significant investments in technology and logistics infrastructure to enhance the online shopping experience. Through initiatives like Walmart.com and the acquisition of online platforms like Jet.com, the company has seamlessly integrated digital and physical retail channels, offering customers unparalleled convenience and choice. Beyond its commercial prowess, Walmart's impact on communities and economies cannot be overstated. Through job creation, vendor partnerships, and philanthropic endeavors, Walmart has become an integral part of the social fabric in many regions. However, its dominance has also sparked debates about labor practices, corporate responsibility, and the homogenization of Main Street businesses, underscoring the complex interplay between corporate power and societal welfare. In conclusion, Walmart's journey from a small-town retailer to a global behemoth exemplifies the transformative power of innovation and ambition. By staying true to its core values while embracing change, Walmart continues to shape the future of retailing, setting benchmarks for efficiency, affordability, and customer-centricity. As it navigates the ever-evolving retail landscape, Walmart remains a beacon of possibility, embodying the ethos of progress and reinvention....

• Global Economy

Corporate Social Responsibility Of Unilever

Corporate Social Responsibility (CSR) has become increasingly important in today's business landscape, with companies worldwide recognizing the need to contribute positively to society while also achieving their financial goals. Unilever, a multinational consumer goods company, stands out as a pioneer and leader in corporate social responsibility initiatives. Unilever's commitment to CSR is deeply ingrained in its corporate culture and business strategy. The company's Sustainable Living Plan, launched in 2010, outlines ambitious goals to enhance the well-being of people and reduce environmental impact. One of the key pillars of this plan is improving the health and well-being of more than a billion people globally by providing access to safe drinking water, sanitation, and hygiene products. Through initiatives like the "Clean Hands, Good Health" program, Unilever has made significant strides in promoting hygiene education and increasing access to essential hygiene products in underserved communities. Furthermore, Unilever is dedicated to reducing its environmental footprint through sustainable sourcing, waste reduction, and energy efficiency measures. The company has set targets to achieve zero waste to landfill and reduce greenhouse gas emissions from its operations. By investing in renewable energy and implementing innovative packaging solutions, Unilever aims to minimize its environmental impact while ensuring the long-term viability of its business. In addition to its environmental efforts, Unilever prioritizes ethical sourcing and fair labor practices throughout its supply chain. The company is committed to upholding human rights and promoting diversity and inclusion in all aspects of its operations. Through initiatives such as the Sustainable Agriculture Code and the Fair Compensation Framework, Unilever works closely with suppliers to ensure fair wages, safe working conditions, and respect for human rights. Unilever's CSR initiatives not only benefit society and the environment but also contribute to the company's long-term success. By aligning its business goals with social and environmental objectives, Unilever has strengthened its brand reputation, enhanced employee morale, and fostered customer loyalty. Moreover, by embracing sustainability and responsible business practices, Unilever has positioned itself as a leader in the global movement towards a more sustainable and equitable future. In conclusion, Unilever's commitment to corporate social responsibility is evident in its comprehensive sustainability initiatives, ethical business practices, and dedication to improving the lives of people around the world. By integrating social and environmental considerations into its business strategy, Unilever demonstrates that profitability and positive societal impact can go hand in hand, setting a compelling example for the corporate world to follow....

• Sustainable Economic Practices

Cover Letter For Grocery Store Clerk

I am writing to express my interest in the position of Grocery Store Clerk at your esteemed establishment. With a strong background in customer service and a keen eye for detail, I am confident in my ability to contribute effectively to the efficient operation of your grocery store. My experience in the retail industry has equipped me with a diverse skill set that aligns well with the requirements of this role. During my previous employment at [Previous Company], I developed expertise in various aspects of customer service, including cash handling, inventory management, and product merchandising. These experiences have honed my ability to prioritize tasks effectively, ensuring that customer needs are met promptly while maintaining store cleanliness and organization. In addition to my practical skills, I bring a positive attitude and a strong work ethic to the table. I thrive in fast-paced environments and am adept at multitasking to handle competing priorities. Whether assisting customers with their inquiries, restocking shelves, or operating the cash register, I approach each task with professionalism and attention to detail. Moreover, I understand the importance of fostering a welcoming atmosphere for shoppers and am committed to providing exceptional service that exceeds their expectations. Furthermore, I am eager to contribute to the team dynamic at your grocery store. I am a collaborative team player who enjoys working alongside colleagues to achieve common goals. I am also open to learning new skills and am adaptable to change, making me well-suited to the dynamic nature of retail environments. I am confident that my positive demeanor, coupled with my strong work ethic and dedication to customer satisfaction, will make me a valuable asset to your team. In conclusion, I am enthusiastic about the opportunity to join your grocery store as a Clerk. With my proven track record in customer service, attention to detail, and ability to thrive in fast-paced environments, I am confident that I can make a significant contribution to the success of your store. Thank you for considering my application. I look forward to the possibility of discussing how my skills and experiences align with your needs in further detail....

• Customer Relationships
• Workplace Culture

Coca Cola Pricing Strategies

Coca-Cola Pricing Strategies Coca-Cola, as one of the world's most iconic brands, employs various pricing strategies to maintain its market position and maximize profitability. One of the primary pricing strategies utilized by Coca-Cola is value-based pricing. This strategy involves setting prices based on the perceived value of the product to the customer. Coca-Cola recognizes that its brand carries significant value and leverages this to command premium prices for its products. By emphasizing the quality, taste, and experience associated with Coca-Cola beverages, the company justifies its pricing and maintains a strong market presence. Another pricing strategy employed by Coca-Cola is penetration pricing. This strategy involves setting low initial prices to penetrate the market quickly and gain market share. Coca-Cola often introduces new products or enters new markets with aggressive pricing to attract customers and build brand loyalty. Once established, Coca-Cola may gradually increase prices or introduce premium product variants to capitalize on its market position and enhance profitability. Coca-Cola also utilizes psychological pricing tactics to influence consumer perception and behavior. For example, pricing products at $0.99 instead of $1 creates the illusion of a lower price, even though the actual difference is minimal. This strategy is aimed at appealing to price-sensitive consumers and stimulating demand. Additionally, Coca-Cola employs bundle pricing by offering value packs or combo deals, encouraging customers to purchase multiple products at a discounted price. This not only increases sales volume but also enhances customer satisfaction by providing added value. Dynamic pricing is another pricing strategy implemented by Coca-Cola, particularly in the retail and vending machine sectors. With dynamic pricing, Coca-Cola adjusts prices based on real-time demand, market conditions, or consumer behavior. For instance, vending machines may increase prices during peak hours or at popular locations to capitalize on higher demand. This flexible pricing approach allows Coca-Cola to optimize revenue and adapt to changing market dynamics effectively. In conclusion, Coca-Cola employs a combination of pricing strategies, including value-based pricing, penetration pricing, psychological pricing, bundle pricing, and dynamic pricing, to achieve its business objectives. By carefully considering market factors, consumer behavior, and brand value, Coca-Cola effectively sets prices that maximize profitability while maintaining its position as a global leader in the beverage industry....

Estee Lauder Thesis Statement

The legacy of Estee Lauder as a pioneering figure in the cosmetics industry transcends mere entrepreneurship; it embodies a profound understanding of consumer psychology, innovative marketing strategies, and a relentless pursuit of excellence. Through meticulous research and analysis, this essay will delve into the multifaceted dimensions of Estee Lauder's impact on the cosmetics industry, elucidating how her visionary approach revolutionized not only the way we perceive beauty but also the dynamics of consumer behavior and brand loyalty. Estee Lauder's success can be attributed to her innate ability to connect with consumers on a deeply emotional level, transcending the superficiality often associated with the beauty industry. By emphasizing the transformative power of cosmetics to enhance one's self-esteem and confidence, she tapped into a fundamental human desire for self-improvement, effectively positioning her brand as a beacon of empowerment. This astute understanding of consumer psychology allowed Estee Lauder to cultivate a loyal customer base that transcended generations, solidifying her brand's enduring legacy in an ever-evolving market landscape. Furthermore, Estee Lauder's strategic approach to marketing played a pivotal role in propelling her brand to global prominence. From pioneering the concept of the "gift with purchase" to leveraging celebrity endorsements, she employed a diverse array of tactics to capture the imagination of consumers and foster brand loyalty. This essay will explore how these marketing innovations not only bolstered Estee Lauder's market share but also reshaped the competitive dynamics of the cosmetics industry, setting new standards for brand visibility and engagement. In conclusion, Estee Lauder's profound impact on the cosmetics industry extends far beyond her entrepreneurial acumen; it embodies a paradigm shift in the way we perceive beauty, consumer behavior, and brand loyalty. By meticulously analyzing her strategic innovations and enduring legacy, this essay aims to provide a comprehensive understanding of Estee Lauder's unparalleled influence, serving as a testament to her enduring legacy as a visionary pioneer in the world of beauty and cosmetics....

Business Ethics Quiz 2 Essay

In today's complex and interconnected business world, ethical considerations play a central role in organizational decision-making and conduct. Business ethics encompasses a wide range of principles and values that guide the behavior of individuals and organizations in the pursuit of their objectives. This essay will delve into the intricacies of business ethics, examining key concepts, ethical dilemmas, and best practices. By exploring real-world examples and ethical frameworks, this essay aims to provide insights into the importance of ethical decision-making in business and its implications for stakeholders. Understanding Business Ethics: At its core, business ethics refers to the moral principles and values that govern the conduct of individuals and organizations in the business environment. It encompasses various aspects such as honesty, integrity, fairness, and responsibility in business practices. Ethical behavior in business involves not only compliance with laws and regulations but also adherence to higher moral standards and consideration of the broader impact of business decisions on stakeholders, including employees, customers, shareholders, and the community. Ethical Dilemmas in Business: One of the primary challenges in business ethics is navigating ethical dilemmas – situations where conflicting moral principles or interests are at play. These dilemmas often arise in areas such as corporate governance, employee relations, environmental sustainability, and marketing practices. For example, companies may face dilemmas related to product safety, labor practices, or financial transparency. Resolving such dilemmas requires careful consideration of ethical principles, stakeholder interests, and potential consequences. Best Practices in Business Ethics: Effective management of business ethics requires the implementation of best practices and ethical frameworks. One widely recognized framework is the "Triple Bottom Line," which emphasizes the importance of considering not only financial performance but also social and environmental impacts. Companies committed to ethical business practices often adopt codes of conduct, establish ethics committees, and provide ethics training to employees. Moreover, fostering a culture of integrity, transparency, and accountability within the organization is essential for upholding ethical standards. Real-World Examples: Numerous real-world examples highlight the significance of business ethics in today's corporate landscape. For instance, the Enron scandal exposed rampant accounting fraud and ethical misconduct, leading to the collapse of the company and widespread regulatory reforms. Conversely, companies like Patagonia and Ben & Jerry's have built their brands around social and environmental responsibility, demonstrating that ethical business practices can be both profitable and sustainable in the long term. Conclusion: In conclusion, business ethics is a fundamental aspect of modern business management, shaping organizational behavior and decision-making processes. By upholding ethical principles and values, businesses can enhance their reputation, build trust with stakeholders, and contribute to sustainable development. However, navigating ethical dilemmas requires careful consideration and adherence to ethical frameworks. As businesses continue to face evolving ethical challenges, a commitment to ethical conduct remains essential for fostering trust, integrity, and long-term success....

• Corporations
• Entrepreneurs

Can't find the essay examples you need?

Use the search box below to find your desired essay examples.

• Search Search Please fill out this field.

Financial Sector: Definition, Examples, Importance to Economy

Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.

Ivestopedia / Michela Buttignol

What Is the Financial Sector?

The financial sector is a section of the economy made up of firms and institutions that provide financial services to commercial and retail customers. This sector comprises a broad range of industries including banks, investment companies, insurance companies, and real estate firms.

Key Takeaways

• The financial sector is a section of the economy made up of firms and institutions that provide financial services to commercial and retail customers.
• A strong financial sector is a sign of a healthy economy.
• The financial sector generates a good portion of its revenue from loans and mortgages and thrives in a low-interest-rate environment.
• The sector is comprised of many different industries including banks, investment companies, insurance companies, and real estate firms.

Understanding the Financial Sector

A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. The health of the economy depends, in large part, on the strength of its financial sector. The stronger it is, the healthier the economy. A weak financial sector typically means the economy is weakening.

Many people equate the financial sector with Wall Street and the exchanges that operate on it. But there's much more to it than that. The financial sector is one of the most important parts of many developed economies. It is made up of brokers , financial institutions, and money markets—all of which provide the services needed to help keep Main Street functioning every day.

In order for an economy to remain stable, it needs to have a healthy financial sector. This sector advances loans for businesses so they can expand, grants mortgages to homeowners, and issues insurance policies to protect people, companies, and their assets. It also helps build up savings for retirement and employs millions of people.

The financial sector generates a good portion of its revenue from loans and mortgages. These gain value in an environment where interest rates drop. When rates are low, the economic conditions open up the doors for more capital projects and investment. When this happens, the financial sector benefits, meaning more economic growth.

Financial Sector Makeup

As mentioned above, the financial sector is made up of many different industries ranging from banks, investment houses, insurance companies, real estate brokers, consumer finance companies, mortgage lenders, and real estate investment trusts (REITs).

The financial sector is one of the largest portions of the S&P 500 . The largest companies within the financial sector are some of the most recognizable banking institutions in the world, including the following:

• JPMorgan Chase (JPM)
• Wells Fargo (WFC)
• Bank of America (BAC)
• Citigroup (C)

While these large companies dominate the sector, there are other, smaller companies that participate in the sector as well. Insurers are also a major industry within the financial sector, being made up of such companies as American International Group (AIG) and Chubb (CB).

Investing in the Financial Sector

Economists often tie the overall health of the economy with the health of the financial sector. If financial companies are weak, this is a detriment to the average consumer. Financial companies provide loans for businesses, mortgages to homeowners, and insurance to consumers. If these activities are restricted, it stunts growth in both small businesses and real estate.

Financial stocks are very popular investments to own within a portfolio. Most companies within the sector issue dividends and are judged on the overall strength of their financial health. During the financial crisis of 2007-2008 , the financial sector was one of the hardest hit, with companies like Lehman Brothers filing for bankruptcy. After an influx of government regulation and restructuring, the financial sector is considerably stronger.

Financial ETFs, such as the Financial Select Sector SPDR Fund (XLF)—the largest financial ETF—can provide investors with broad exposure to the sector.

As of the close of trading on Sept. 29, 2020, the financial sector had a combined market capitalization of $5.59 trillion. The sector has underperformed the S&P 500 index in the trailing 12 months (TTM), where the S&P 500 is up 14.3% while the S&P 500 Financials Sector has fallen 13.7%.

Special Considerations

Some of the positive factors that affect the financial sector include:

• Moderately rising interest rates. As rates rise, financial services companies can earn more on the money they have and on credit they issue to their customers. 
• Reducing regulation. Whenever the government decides to cut back on red tape, members of the financial sector will benefit. This means it could lessen the burden while increasing profits.
• Lower consumer debt levels. as consumers decrease their debt loads, they lessen the risk of defaults . This lighter load also means they may have a tolerance for more debt, further increasing profitability.

Conversely, investors should consider some of the negative factors that affect this sector as well:

• Rapid interest rate increases. If rates rise too quickly, demand for credit such as mortgages could drop, which could negatively affect certain parts of the financial sector. 
• Yield curve flattening. If the spread between long- and short-term interest rates drop too far, the financial sector could start to struggle.
• More legislation. Government regulation can have a big impact on the financial sector. While it may help protect consumers, more red tape can bog down a business that operates in financial services.

Fidelity. " Financials ." Accessed Sept. 30, 2020.

• Terms of Service
• Editorial Policy
• Privacy Policy

• भाषा : हिंदी
• Classroom Courses
• Our Selections
• Student Login
• About NEXT IAS
• Director’s Desk
• Advisory Panel
• Faculty Panel
• General Studies Courses
• Optional Courses
• Interview Guidance Program
• Postal Courses
• Test Series
• Current Affairs
• Student Portal

• Prelims Analytica
• CSE (P) 2024 Solutions
• Pre Cum Main Foundation Courses
• 1 Year GSPM Foundation Course
• 2 Year Integrated GSPM Foundation Course
• 3 Year Integrated GSPM Foundation Course
• 2 Year GSPM Foundation with Advanced Integrated Mentorship (FAIM)
• Mentorship Courses
• 1 Year Advanced Integrated Mentorship (AIM)
• Early Start GS Courses
• 1 Year GS First Step
• Mains Specific
• Mains Advance Course (MAC) 2024
• Essay Guidance Program cum Test Series 2024
• Ethics Enhancer Course 2024
• Prelims Specific
• Weekly Current Affairs Course 2025
• Current Affairs for Prelims (CAP) 2025
• CSAT Course 2025
• CSAT EDGE 2025
• Optional Foundation Courses
• Mathematics
• Anthropology
• Political Science and International Relations (PSIR)
• Optional Advance Courses
• Political Science & International Relations (PSIR)
• Civil Engineering
• Electrical Engineering
• Mechanical Engineering
• Interview Guidance Programme / Personality Test Training Program
• GS + CSAT Postal Courses
• Current Affairs Magazine – Annual Subscription
• GS+CSAT Postal Study Course
• First Step Postal Course
• Postal Study Course for Optional Subjects
• Prelims Test Series for CSE 2024 (Offline/Online)
• General Studies
• GS Mains Test Series for CSE 2024
• Mains Test Series (Optional)
• PSIR (Political Science & International Relations)
• Paarth PSIR
• PSIR Answer Writing Program
• PSIR PRO Plus Test Series
• Mathematics Year Long Test Series (MYTS) 2024
• Indian Economic Services
• Anubhav (All India Open Mock Test)
• Prelims (GS + CSAT)
• Headlines of the Day
• Daily Current Affairs
• Editorial Analysis
• Monthly MCQ Compilation
• Monthly Current Affairs Magazine
• Previous Year Papers
• Down to Earth
• Kurukshetra
• Union Budget
• Economic Survey
• Download NCERTs
• NIOS Study Material
• Beyond Classroom
• Toppers’ Copies
• Indian Economy

Banking System in India: Structure, Types & More

Banking System in India or Indian Banking System is the cornerstone of the nation’s economic framework. By channeling funds from savers to borrowers, and facilitating investment and individual financial needs, it plays a crucial role in the country’s economic development. Understanding the structure and functions of the Indian Banking System is essential for developing a grasp of the Indian Financial System. This article of NEXT IAS aims to study in detail the Banking System in India, including its classification, structure, types of banks, and other related concepts.

What is Banking System in India?

Banking System in India or Indian Banking System or Banking Sector in India refers to a network of financial institutions , such as banks and credit unions, that handle financial transactions and provide financial services to individuals, businesses, and governments. These institutions, primarily, act as intermediaries between people with money i.e. savers , and those who need money i.e. borrowers . The types of services offered by the banking institutions, usually, include accepting deposits, lending money, facilitating transactions, and offering various financial products like savings accounts, loans, and credit cards.

Classification of Banks in India

Banks, forming part of the Banking System in India, can be divided into two categories – Scheduled Banks and Non-Scheduled Banks.

Scheduled Banks

Scheduled Banks under the Banking System in India refer to those financial institutions that are listed in the 2nd Schedule of the Reserve Bank of India Act, 1934. This inclusion signifies that they meet specific criteria set by the RBI and are subject to its stricter regulations.

A bank to be listed in the schedule has to satisfy the following 2 conditions:

• It should have paid-up capital and reserves of not less than 5 lacs, and
• It should satisfy the RBI that their affairs are not being conducted in a manner detrimental to the interest of their depositors.

If any Scheduled Bank violates these conditions, it gets de-listed from the schedule.

A Scheduled Bank gets the following benefits :

• Facility of loans on Bank Rate from RBI.
• Automatic membership of Clearing House.
• Facility of Re-Discount of first-class exchange bills from RBI.

Non-Scheduled Banks

Non-Scheduled Banks under the Banking System in India refer to those financial institutions that don’t meet the criteria to be included in the 2nd Schedule of the Reserve Bank of India Act, 1934. Being excluded from the schedule means they operate under a different set of regulations as compared to Scheduled Banks.

Difference between Scheduled Banks and Non-Scheduled Banks

Structure of Banking System in India

The Reserve Bank of India (RBI) sits at the top of the structure of the Banking System in India and acts as the central bank of India. Beneath the central bank operates various types of banks as discussed in the sections that follow.

Reserve Bank of India (RBI)

• The Reserve Bank of India (RBI) is the Central Bank of India, meaning that it is the apex body in the Banking System in India.
• It is owned by the Union Ministry of Finance.
• It acts as a regulatory body , responsible for the regulation of the Indian banking system as well as the control, issuing, and maintaining money supply in the Indian economy.

Its Objectives, History, Structure, Functions, and Other Related Concepts can be studied in our detailed article on the Reserve Bank of India (RBI) .

Commercial Banks

• Commercial Banks refer to those banks under the Banking System in India that run on a commercial basis. It means that they operate and offer services to earn a profit.
• They are regulated under the Banking Regulation Act, 1949.

Their Structure, Types, Importance, and Other Related Concepts can be studied in our detailed article on Commercial Banks in India .

Cooperative Banks

• Cooperative Banks refer to those financial institutions under the Banking System in India that operate on the principles of cooperation and mutual benefit for their members.
• Thus, it can be said that the customers are the owners of these banks.
• Cooperative Banks are named so because these have the cooperation of stakeholders as the motive.

Their Features, Regulations, Structure, Significance, and Other Related Concepts related to Cooperative Banks can be studied in our detailed article on Cooperative Banks in India .

Development Banks

• Development Banks are also known as Term-Lending Institutions (TLIs) or Development Finance Institutions (DFIs).
• They are specialized financial institutions under the Banking System in India that provide long-term finance and support to the sectors of the Indian economy which possess higher risks and cannot have access to adequate loans from Commercial Banks.

Their Types, Roles, and Other Related Concepts can be studied in our detailed article on Development Banks in India .

Differentiated Banks

• Differentiated Banks under the Indian Banking System refer to those banks that cater to a specific segment of customers.
• The concept of Differentiated Banks was introduced in the Banking System in India by the RBI based on the recommendations of the Nachiket Mor Committee in 2013 in order to offer specialized services or unique products designed specifically to suit a particular sector.

Their Types, Roles, and Other Related Concepts can be studied in our detailed article on Differentiated Banks in India .

Non-Banking Finance Companies (NBFCs)

• A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
• They are not considered part of the traditional Banking System in India, but they do operate within the larger financial system regulated by the RBI.
• NBFC’s financial assets should constitute more than 50% of the total assets and income from financial assets should constitute more than 50% of the gross income.
• For example, Merchant Banking Companies are regulated by SEBI, and Insurance Companies are regulated by IRDA.

Difference between NBFCs and Banks

Basel Norms or Basel Accords

• In the era of globalization, there are many banks which operate internationally. Failure in any such banks may trigger a relatively large number of simultaneous failures within the financial sector. Basel Norms are devised to avoid this.
• They aim to strengthen regulation, supervision, and risk management of the banking sector in India and the world to improve its ability to absorb shocks arising from financial and economic stress.
• Basel Norms are fixed by the Basel Committee on Banking Supervision (BCBS) – a part of the Bank for International Settlements (BIS), Switzerland, which is a coordinating agency for Central Banks of various countries.
• These norms are applicable to individual banks and Systemically Important Financial Institutions (SIFIs).
• Their implementation is done by the Central Banks of the respective countries.
• So far, 3 sets of Basel Norms have been developed – Basel I, Basel II, and Basel III.

Basel I Norms

• The first Basel Accord, known as Basel I, was issued in 1988
• It focused on credit risks and defined capital and structure of risk weights for banks
• The minimum capital requirement was fixed at 8% of the Risk-Weighted Assets (RWA)

Basel II Norms

• It is the refined and reformed version of Basel I, which was published in 2004.
• It defined 3 types of risks – Operational Risks, Capital Risks, and Market Risks.
• Its 3 main pillars of Basel II were as follows:

Basel III Norms

• Basel III guidelines were released in December 2010 in the backdrop of the financial crisis of 2008.
• The guidelines aim to promote a more resilient banking system by focusing on four vital banking parameters viz. capital, leverage, funding, and liquidity.
• The 3 main pillars of Basel III are as follows:

Capital-to-Risk Weighted Asset Ratio (CRAR) or Capital Adequacy Ratio (CAR)

• Capital-to-Risk Weighted Asset Ratio (CRAR) or Capital Adequacy Ratio (CAR) refers to the availability of sufficient capital as a %ge of risk-weighted assets. Thus, CRAR = (Total Capital/Total Risk-Weighted Assets)x100
• Where, Total Risk-Weighted Capital = Weighted average of total capital assets held by the bank.
• CRAR is fixed under Basal Norms.
• The principle behind fixing CRAR is that banks should have an adequate amount of their own capital to cover risks arising from Bad Assets (Bad Loans)
• For the calculation of CRAR, the loan amount given in each sector is to be multiplied by the presumed risk percentage of a specific sector. The product gives the amount of risk-weighted assets. For example,

Related Concepts

Domestic systemically important banks (d-sibs).

• Due to this perception, these banks enjoy certain advantages in the funding markets.
• Usually, the banks whose assets exceed 2% of the GDP of India are considered as D-SIBs.
• As of now, the State Bank of India (SBI), ICICI Bank, and HDFC Bank have been identified as D-SIBs by the RBI.
• Neobanks refers to the ‘fintech firms ’ that solely have a digital presence, without any physical branches.
• Neobanks aims to give customers a cheaper alternative to traditional banks by leveraging technology to offer personalized services to customers while minimizing operating costs.
• Neobank doesn’t have a banking license themselves and instead partners up with a traditional bank to provide their products,
• Neobanks obtain banking licenses themselves to operate fully on their own.
• Examples of neobanks in India include – RazorpayX, Jupiter, Neo, Epifi, and Open.

Banking System in India or Indian Banking System is a dynamic and evolving entity, continuously adapting to meet the changing needs of the economy and its citizens. As India marches towards a more digital and inclusive future, the Banking System in India will undoubtedly play a critical role in ensuring sustainable economic growth and prosperity.

RELATED ARTICLES MORE FROM AUTHOR

National statistics day 2024, taxation system in india, direct tax: meaning, types, significance & criticisms, indirect tax: meaning, types, significance & criticisms, goods and services tax (gst): evolution, features, benefits & more, inflation: meaning, types, measures, effects & more, leave a reply cancel reply.

Save my name, email, and website in this browser for the next time I comment.

Featured Post

NEXT IAS (Delhi)

Old rajinder nagar.

• 27-B, Pusa Road, Metro Pillar no.118, Near Karol Bagh Metro, New Delhi-110060

Mukherjee Nagar

• 1422, Main Mukherjee Nagar Road. Near Batra Cinema New Delhi-110009

NEXT IAS (Jaipur)

• NEXT IAS - Plot No - 6 & 7, 3rd Floor, Sree Gopal Nagar, Gopalpura Bypass, Above Zudio Showroom Jaipur (Rajasthan) - 302015

NEXT IAS (Prayagraj)

• 31/31, Sardar Patel Marg, Civil Lines, Prayagraj, Uttar Pradesh - 211001

NEXT IAS (Bhopal)

• Plot No. 46 Zone - 2 M.P Nagar Bhopal - 462011
• 8827664612 ,

Gig Economy: Advantages, Challenges & Driving Factors

Essay on Growth of Banking Sector in India

Students are often asked to write an essay on Growth of Banking Sector in India in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Growth of Banking Sector in India

Introduction.

The banking sector in India has seen significant growth since independence. This expansion has been driven by factors such as economic liberalization, technological advancements, and increasing financial literacy.

Post-Independence Era

Post-independence, the government nationalized major banks for better financial inclusion. This led to the spread of banking services to rural areas, fostering economic growth.

Economic Liberalization

In the 1990s, economic liberalization allowed private banks to operate. This increased competition, leading to improved services and customer satisfaction.

Technological Advancements

Technological advancements like internet banking and mobile banking have made banking services accessible to everyone, further fueling growth.

250 Words Essay on Growth of Banking Sector in India

India’s banking sector has experienced significant growth, transforming from a traditional system to a more comprehensive, technology-driven one. This growth is a reflection of the country’s economic development and the government’s efforts to increase financial inclusion.

Liberalization and Expansion

The liberalization of the banking sector in the 1990s played a pivotal role in its growth. The Reserve Bank of India (RBI) introduced reforms that encouraged competition, leading to the establishment of new private sector and foreign banks. This increased the availability of banking services across the country.

Technology has been a catalyst for the growth of the banking sector. The introduction of digital banking, mobile banking, and ATMs has made banking services more accessible. It has also led to the development of new products and services, enhancing customer satisfaction and increasing the sector’s efficiency.

Financial Inclusion

The Indian government’s focus on financial inclusion has further propelled the growth of the banking sector. Initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY) have resulted in millions of new bank accounts, bringing the unbanked population into the formal financial system.

Challenges and Future Prospects

Despite its growth, the sector faces challenges like non-performing assets (NPAs) and cyber threats. However, with the RBI’s proactive measures and the government’s supportive policies, the banking sector is poised for further growth.

500 Words Essay on Growth of Banking Sector in India

The banking sector in India has witnessed a paradigm shift over the past few decades. From being a heavily regulated industry, it has transformed into a liberalized, competitive, and technology-driven sector. This essay delves into the growth of the banking sector in India, its key drivers, and the challenges it faces.

Evolution of the Banking Sector

The banking sector in India has undergone significant changes since independence. The nationalization of banks in 1969 was a pivotal event that aimed to extend banking services to rural areas and promote priority sector lending. However, the sector was plagued with inefficiencies, leading to the initiation of economic reforms in 1991. These reforms led to the liberalization of the banking sector, allowing the entry of private and foreign banks, thereby fostering competition and efficiency.

The growth of banking in India is also attributed to the government’s focus on financial inclusion. Initiatives like Pradhan Mantri Jan Dhan Yojana (PMJDY) aimed at providing every household access to banking services. This has led to an increase in the number of bank accounts and has brought a significant portion of the population under the formal banking system.

Challenges and the Way Forward

Despite significant growth, the banking sector in India faces several challenges. The high level of Non-Performing Assets (NPAs) is a major concern that threatens the financial stability of banks. Moreover, cybersecurity threats pose a significant risk in the digital era.

The banking sector in India has come a long way, with technology and financial inclusion being the key drivers of growth. Despite the challenges, the sector holds immense potential. The ongoing digital revolution, coupled with initiatives to deepen financial inclusion, will further propel the growth of the banking sector in India. It is essential to address the challenges to sustain this growth and leverage the opportunities that the future holds.

That’s it! I hope the essay helped you.

If you’re looking for more, here are essays on other interesting topics:

Happy studying!

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Home — Essay Samples — Economics — Finances — Banking

Banking Essay Topics

The importance of writing an essay on banking.

Writing an essay on banking is important for several reasons. First and foremost, it allows students to gain a deeper understanding of the banking industry and its role in the economy. By researching and writing about banking, students can learn about the various functions of banks, the impact of banking on individuals and businesses, and the regulatory framework that governs the industry.

Additionally, writing an essay on banking can help students develop critical thinking and analytical skills. They will need to gather and evaluate information, form their own opinions, and present their findings in a clear and organized manner. These skills are not only valuable in academia but also in the professional world, where the ability to analyze and communicate complex information is highly sought after.

Writing Tips for an Essay on Banking

• Choose a specific topic: Banking is a broad subject, so it's important to narrow down your focus. Consider writing about a specific aspect of banking, such as the role of central banks, the impact of digital banking, or the challenges facing the banking industry.
• Conduct thorough research: Use a variety of reputable sources, such as academic journals, books, and industry reports, to gather information for your essay. Make sure to critically evaluate the information and consider multiple perspectives.
• Organize your thoughts: Create an outline to help you structure your essay. This will ensure that your arguments flow logically and that you cover all the necessary points.
• Support your arguments with evidence: Back up your claims with data, statistics, and examples. This will make your essay more convincing and credible.
• Edit and proofread: Once you have written your essay, take the time to revise and edit it. Check for grammar and spelling errors, and make sure your writing is clear and concise.

Overall, writing an essay on banking can be a valuable learning experience that helps students develop a deeper understanding of the industry and build important skills for their academic and professional careers.

• The role of banks in the economy
• The impact of digital banking on traditional banking
• The future of banking: trends and developments
• The role of central banks in the financial system
• The importance of financial regulation in banking
• The impact of globalization on banking
• The ethical considerations in banking practices
• The role of technology in shaping the future of banking
• The challenges and opportunities in the banking industry
• The impact of the COVID-19 pandemic on banking
• The role of consumer behavior in banking
• The importance of financial literacy in banking
• The role of banks in promoting financial inclusion
• The impact of climate change on banking
• The role of risk management in banking
• The future of branch banking in a digital world
• The impact of artificial intelligence on banking
• The role of big data in banking
• The importance of cybersecurity in banking
• The impact of fintech on traditional banking
• The role of banks in supporting small businesses
• The impact of interest rates on banking
• The role of banks in promoting sustainable finance
• The impact of mergers and acquisitions on the banking industry
• The role of corporate social responsibility in banking
• The impact of monetary policy on banking
• The role of investment banking in the financial system
• The impact of banking on economic development
• The role of banks in managing financial crises
• The impact of mobile banking on traditional banking services
• The role of banks in wealth management
• The impact of demographic changes on banking
• The role of banks in the mortgage market
• The impact of banking on income inequality
• The role of banks in the payment system
• The impact of banking on personal finance
• The role of banks in the foreign exchange market
• The impact of banking on real estate markets
• The role of banks in the bond market
• The impact of banking on stock markets
• The role of banks in the insurance industry
• The impact of banking on retirement planning
• The role of banks in the derivatives market
• The impact of banking on corporate finance
• The role of banks in the commodities market
• The impact of banking on sovereign wealth funds
• The role of banks in the private equity market
• The impact of banking on venture capital
• The role of banks in the hedge fund industry
• The impact of banking on alternative investments

Banks play a crucial role in the economy by providing financial services to individuals, businesses, and governments. They facilitate the flow of funds and credit, which is essential for economic growth and development. Banks also play a key role in the payment system, money transmission, and the allocation of resources in the economy.

One of the primary functions of banks is to accept deposits from individuals and businesses and provide them with a safe place to store their money. This is important because it allows people to save and earn interest on their savings, which encourages thrift and investment. Banks also provide loans and credit to individuals and businesses, which helps to finance consumption and investment.

Banks also play a crucial role in the payment system by providing a means for people to make and receive payments. This is important because it allows for the efficient exchange of goods and services, which is essential for economic activity. Banks also provide money transmission services, which allow people to send and receive funds domestically and internationally.

In addition to providing financial services to individuals and businesses, banks also play a key role in the government's fiscal operations. They help to finance government spending by purchasing government securities and lending money to the government. This is important because it helps to fund public infrastructure and services, which are essential for economic development.

Overall, banks play a crucial role in the economy by providing financial services to individuals, businesses, and governments. They facilitate the flow of funds and credit, which is essential for economic growth and development. Banks also play a key role in the payment system, money transmission, and the allocation of resources in the economy. Without banks, the economy would not be able to function effectively, and economic development would be hindered. Therefore, banks are an essential part of the financial system and play a crucial role in the economy.

Technology Used in E-banking and Its Functions

Cybercrime in banking industry and its impacts on banking industry, made-to-order essay as fast as you need it.

Each essay is customized to cater to your unique preferences

+ experts online

Digital Evolution in The Indian Banking System

Review of the technologies influence on transformations in the banking industry, the use of voice in biometric authentication, goods and services tax (gst) in the banking sector, let us write you an essay from scratch.

• 450+ experts on 30 subjects ready to help
• Custom essay delivered in as few as 3 hours

Online Banking: Definition and Features

Banking sector and ethical issues nowadays, analysis of technology and innovation in banking/finance sector, review of related literature and studies on fraud in different banking institutions, get a personalized essay in under 3 hours.

Expert-written essays crafted with your exact needs in mind

Banking Sector Development in Ethiopia

Impact of fdi on indian banking sector, the impact of information and communication technology on banks' performance in the banking industry, bank, as a financial institution, theories of bank run contagion, a potential role for blockchain in payments, the payments banks of india, main reasons of financial crisis, positioning of equity savings funds, the difference between fintech and financial innovation, ibm and stronghold backing stable coins, stronghold usd, the main critical variables influencing the npls, the fair and accurate credit transactions act, national bank for agriculture and rural development, the benefits of private finance initiative, the main tendencies and perspectives of modern banking, carding as a threat to a economy system, why banking regulation should be made, effects of inflation on kenya commercial banks lending, the sharia finance model as an ethical alternative to conventional banking, relevant topics.

• Supply and Demand
• Stock Market
• Credit Card
• Financial Crisis
• Foreign Exchange Market

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy . We’ll occasionally send you promo and account related email

No need to pay just yet!

We use cookies to personalyze your web-site experience. By continuing we’ll assume you board with our cookie policy .

• Instructions Followed To The Letter
• Deadlines Met At Every Stage
• Unique And Plagiarism Free

Banking Industry Essays

The role of corporate social responsibility in building brand reputation and attracting customers in the banking industry, ica regulatory compliance, essay on banking risk, blockchain technology and chinese banking industry, identifying customers in the retail, banking, and healthcare industries, essay on operation management (om), enterprise risk management: risk, governance and culture, risk management in the banking sector, reason why banks are potentially failing, chinese banking: a review of the literature since 2000, role of information technology in barclay’s bank, corporate finance: sustainability in raising finance, popular essay topics.

• American Dream
• Artificial Intelligence
• Black Lives Matter
• Bullying Essay
• Career Goals Essay
• Causes of the Civil War
• Child Abusing
• Civil Rights Movement
• Community Service
• Cultural Identity
• Cyber Bullying
• Death Penalty
• Depression Essay
• Domestic Violence
• Freedom of Speech
• Global Warming
• Gun Control
• Human Trafficking
• I Believe Essay
• Immigration
• Importance of Education
• Israel and Palestine Conflict
• Leadership Essay
• Legalizing Marijuanas
• Mental Health
• National Honor Society
• Police Brutality
• Pollution Essay
• Racism Essay
• Romeo and Juliet
• Same Sex Marriages
• Social Media
• The Great Gatsby
• The Yellow Wallpaper
• Time Management
• To Kill a Mockingbird
• Violent Video Games
• What Makes You Unique
• Why I Want to Be a Nurse
• Send us an e-mail

Introduction to Banking Sector In India Essay Example

• Pages: 17 (4648 words)
• Published: April 19, 2017
• Type: Essay

1. 1 Introduction

A bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. There are also nonbanking institutions that provide certain banking services without meeting the legal definition of a bank. Banks are a subset of the financial services industry.

A banking system also referred as a system provided by the bank which offers cash management services for customers, reporting the transactions of their accounts and portfolios, through out the day. The banking system in India, should not only be hassle free but it should be able to meet the new challenges posed by the technology and any other external and internal factors. For the past three decades, India’s banking system has several outstanding achievements to its cred

it. The Banks are the main participants of the financial system in India. The Banking sector offers several facilities and opportunities to their customers.

All the banks safeguards the money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s cheques. The banks also offer investment and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role—accepting deposits and lending funds from these deposits.

1.2 Need of the Banks

Before the establishment of banks, the financial activities were handled by money lenders and individuals. At that time the interest rates were very high. Read also article

"A nation should require all of its students to study the same national curriculum until they enter college".

Again there were no security of public savings and no uniformity regarding loans. So as to overcome such problems the organized banking sector was established, which was fully regulated by the government. The organized banking sector works within the financial system to provide loans, accept deposits and provide other services to their customers. The following functions of the bank explain the need of the bank nd its importance: To provide the security to the savings of customers. To control the supply of money and credit To encourage public confidence in the working of the financial system, increase savings speedily and efficiently. To avoid focus of financial powers in the hands of a few individuals and institutions. To set equal norms and conditions (i. e. rate of interest, period of lending etc) to all types of customers

1. 3 History of Indian Banking System

The first bank in India, called The General Bank of India was established in the year 1786. The East India Company established The Bank of Bengal/Calcutta (1809), Bank of Bombay (1840) and Bank of Madras (1843). The next bank was Bank of Hindustan which was established in 1870. These three individual units (Bank of Calcutta, Bank of Bombay, and Bank of Madras) were called as Presidency Banks. Allahabad Bank which was established in 1865, was for the first time completely run by Indians. Punjab National Bank Ltd. was set up in 1894 with head quarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank

of Mysore were set up.

In 1921, all presidency banks were amalgamated to 21 form the Imperial Bank of India which was run by European Shareholders. After that the Reserve Bank of India was established in April 1935. At the time of first phase the growth of banking sector was very slow. Between 1913 and 1948 there were approximately 1100 small banks in India. To streamline the functioning and activities of commercial banks, the Government of India came up with the Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 3 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as a Central Banking Authority. After independence, Government has taken most important steps in regard of Indian Banking Sector reforms. In 1955, the Imperial Bank of India was nationalized and was given the name "State Bank of India", to act as the principal agent of RBI and to handle banking transactions all over the country. It was established under State Bank of India Act, 1955. Seven banks forming subsidiary of State Bank of India was nationalized in 1960.

On 19th July, 1969, major process of nationalization was carried out. At the same time 14 major Indian commercial banks of the country were nationalized. In 1980, another six banks were nationalized, and thus raising the number of nationalized banks to 20. Seven more banks were nationalized with deposits over 200 Crores. Till the year 1980 approximately 80% of the banking segment in India was under government’s ownership. On the suggestions of Narsimhan Committee, the Banking Regulation Act

was amended in 1993 and thus the gates for the new private sector banks were opened.

 1. 3.1 Nationalisation

By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensured about the possibility to nationalise the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the Government of India (GOI) in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation".

The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "Masterstroke of political sagacity" Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August, 1969.

A second step of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second step of nationalisation, the GOI controlled around 91% of the banking business in India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalised banks and resulted in the reduction of the number of nationalised banks from 20 to 19.

After this, until the 1990s, the nationalised banks grew at a pace of

around 4%, closer to the average growth rate of the Indian economy. The nationalised banks were credited by some; including Home minister P. Chidambaram, to have helped the Indian economy withstand the global financial crisis of 2007-2009.

1. 3. 2 Liberalisation

In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalisation, licensing a small number of private banks.

These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of 23 Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move along with the rapid growth in the economy of India revolutionized the banking sector in India which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for the traditional banks.

All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently (2007), banking in India is generally fairly mature in

terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets as compared to other banks in comparable economies in its region.

The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%.

This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be voted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and 24 personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.

1. 3. 3 Government policy on banking industry (Source:-The federal Reserve Act 1913 and The Banking Act 1933)

Banks operating in most of the countries must contend with heavy regulations, rules enforced by Federal and State

agencies to govern their operations, service offerings, and the manner in which they grow and expand their facilities to better serve the public. A banker works within the financial system to provide loans, accept deposits, and provide other services to their customers. They must do so within a climate of extensive regulation, designed primarily to protect the public interests. The main reasons why the banks are heavily regulated are as follows: To protect the safety of the public’s savings.

To control the supply of money and credit in order to achieve a nation’s broad economic goal. To ensure equal opportunity and fairness in the public’s access to credit and other vital financial services. To promote public confidence in the financial system, so that savings are made speedily and efficiently. To avoid concentrations of financial power in the hands of a few individuals and institutions. Provide the Government with credit, tax revenues and other services. To help sectors of the economy that they have special credit needs for eg. Housing, small business and agricultural loans etc.

1. 3.4 Law of banking

Banking law is based on a contractual analysis of the relationship between the bank and customer—defined as any entity for which the bank agrees to conduct an account. The law implies rights and obligations into this relationship as follows:  The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank. The bank agrees to pay the customer's cheques up to the amount standing to the credit of the

customer's account, plus any agreed overdraft limit.

The bank may not pay from the customer's account without a mandate from the customer, e. g. cheques drawn by the customer. The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account.  The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship. The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank.

The bank must not disclose details of transactions through the customer's account—unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it.

The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days. These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new ights, obligations or limitations relevant to the bank-customer relationship.

1. 3. 5 Regulations for Indian banks

Currently in most jurisdictions commercial banks are regulated by government entities and require a special bank license to operate. Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customer's order—although money lending, by itself, is generally not included in the definition. Unlike most other regulated industries, the regulator is typically also a participant in

the market, i. . a government-owned (central) bank. Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case. In UK, for example, the Financial Services Authority licenses banks, and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK government's central bank. Some types of financial institutions, such as building societies and credit unions, may be partly or wholly exempted from bank license requirements, and therefore regulated under separate rules.

The requirements for the issue of a bank license vary between jurisdictions but typically include:

Minimum capital

Minimum capital ratio 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior officers Approval of the bank's business plan as being sufficiently prudent and plausible.

1. 4 Classification of Banking Industry in India

Indian banking industry has been divided into two parts, organized and unorganized sectors.

The organized sector consists of Reserve Bank of India, Commercial Banks and Co-operative Banks, and Specialized Financial Institutions (IDBI, ICICI, IFC etc). The 27 unorganized sector, which is not homogeneous, is largely made up of money lenders and indigenous bankers. An outline of the Indian Banking structure may be presented as follows:

1. Reserve banks of India.

2. Indian Scheduled Commercial Banks.

a) State Bank of India and its associate banks.

b) Twenty nationalized banks.

c) Regional rural banks.

d) Other scheduled commercial banks.

3. Foreign Banks

4. Non-scheduled banks.

5. Co-operative banks.

4. 1.1 Reserve bank of India

The reserve bank of India is a central bank and was established in April 1, 1935 in accordance with the provisions of reserve bank of India act 1934. The central

office of RBI is located at Mumbai since inception. Though originally the reserve bank of India was privately owned, since nationalization in 1949, RBI is fully owned by the Government of India. It was inaugurated with share capital of Rs. 5 Crores divided into shares of Rs. 100 each fully paid up. RBI is governed by a central board (headed by a governor) appointed by the central government of India.

RBI has 22 regional offices across India. The reserve bank of India was nationalized in the year 1949. The general superintendence and direction of the bank is entrusted to central board of directors of 20 members, the Governor and four deputy Governors, one Governmental official from the ministry of Finance, ten nominated directors by the government to give representation to important elements in the economic life of the country, and the four nominated director by the Central Government to represent the four local boards with the headquarters at Mumbai, Kolkata, Chennai and 8 New Delhi. Local Board consists of five members each central government appointed for a term of four years to represent territorial and economic interests and the interests of cooperative and indigenous banks. The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the statutory basis of the functioning of the bank. The bank was constituted for the need of following: To regulate the issues of banknotes. To maintain reserves with a view to securing monetary stability To operate the credit and currency system of the country to its advantage.

Functions of RBI as a central bank of India are explained briefly as follows:

Bank of Issue: The RBI formulates, implements, and

monitors the monitory policy. Its main objective is maintaining price stability and ensuring adequate flow of credit to productive sector. Regulator-

Supervisor of the financial system: RBI prescribes broad parameters of banking operations within which the country’s banking and financial system functions. Their main objective is to maintain public confidence in the system, protect depositor’s interest and provide cost effective banking services to the public.

Manager of exchange control: The manager of exchange control department manages the foreign exchange, according to the foreign exchange management act, 1999. The manager’s main objective is to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

Issuer of currency: A person who works as an issuer, issues and exchanges or destroys the currency and coins that are not fit for circulation. His main objective is to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role: The RBI performs the wide range of promotional functions to support national objectives such as contests, coupons maintaining good public relations and many more.

Related functions: There are also some of the related functions to the above mentioned main functions. They are such as, banker to the government, banker to banks etc….

Banker to government performs merchant banking function for the central and the state governments; also acts as their banker. Banker to banks maintains banking accounts to all scheduled banks.

Controller of Credit: RBI performs the following tasks:  It holds the cash reserves of all the scheduled banks. It controls the credit operations of banks through quantitative and qualitative controls. It controls the banking system through the system of licensing, inspection and calling

for information. It acts as the lender of the last resort by providing rediscount facilities to scheduled banks.

Supervisory Functions: In addition to its traditional central banking functions, the Reserve Bank performs certain non-monetary functions of the nature of supervision of banks and promotion of sound banking in India.

The Reserve Bank Act 1934 and the banking regulation act 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks, relating to licensing and establishments, branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction and liquidation. The RBI is authorized to carry out periodical inspections of the banks and to call for returns and necessary information from them.

The nationalisation of 14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid development of the economy and realisation of certain desired social objectives. The supervisory functions of the RBI have helped a great deal in improving 30 the standard of banking in India to develop on sound lines and to improve the methods of their operation.

Promotional Functions: With economic growth assuming a new urgency since independence, the range of the Reserve Bank’s functions has steadily widened.

The bank now performs a variety of developmental and promotional functions, which, at one time, were regarded as outside the normal scope of central banking. The Reserve bank was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies.

1. 4. 2 Indian Scheduled Commercial Banks

The commercial banking structure in India consists of scheduled commercial banks, and unscheduled

banks. Scheduled Banks: Scheduled Banks in India constitute those banks which have been included in the second schedule of RBI act 1934.

RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42(6a) of the Act. “Scheduled banks in India” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the s State Bank of India (subsidiary banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank”.

For the purpose of assessment of performance of banks, the Reserve Bank of India categories those banks as public sector banks, old private sector banks, new private sector banks and foreign banks, i. e. private sector, public sector, and foreign banks come under the umbrella of scheduled commercial banks.

Regional Rural Bank: The government of India set up Regional Rural Banks (RRBs) on October 2, 1975.  The banks provide credit to the weaker sections of the rural areas, particularly the small and marginal farmers, agricultural labourers, and small enterpreneurs. Initially, five RRBs were set up on October 2, 1975 which was sponsored by Syndicate Bank, State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of India. The total authorized capital was fixed at Rs. 1 Crore which has since been raised to Rs. 5 Crores.

There are several

concessions enjoyed by the RRBs by Reserve Bank of India such as lower interest rates and refinancing facilities from NABARD like lower cash ratio, lower statutory liquidity ratio, lower rate of interest on loans taken from sponsoring banks, managerial and staff assistance from the sponsoring bank and reimbursement of the expenses on staff training. The RRBs are under the control of NABARD. NABARD has the responsibility of laying down the policies for the RRBs, to oversee their operations, provide refinance facilities, to monitor their performance and to attend their problems.

Unscheduled Banks: “Unscheduled Bank in India” means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank”.

1. 4. 3 NABARD

NABARD is an apex development bank with an authorization for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas.

In discharging its role as a facilitator for rural prosperity, NABARD is entrusted with: 1. Providing refinance to lending institutions in rural areas 2. Bringing about or promoting institutions development and 3. Evaluating, monitoring and inspecting the client banks 32 Besides this fundamental role, NABARD also:  Act as a coordinator in the operations of rural credit institutions To help sectors of the economy that they have special credit needs for eg. Housing, small business and agricultural loans etc.

1. 4. 4 Co-operative Banks

Co-operative banks are explained in detail in Section – II of this chapter 1.

Services provided by banking organizations Banking Regulation Act in India, 1949 defines banking as “Accepting” for the purpose of lending or investment of deposits of money from the public, repayable on demand and withdrawable by cheques, drafts, orders etc. as per the above definition a bank essentially performs the following functions:

• Accepting Deposits or savings functions from customers or public by providing bank account, current account, fixed deposit account, recurring accounts etc. The payment transactions like lending money to the public.

Bank provides an effective credit delivery system for loanable transactions. Provide the facility of transferring of money from one place to another place. For performing this operation, bank issues demand drafts, banker’s cheques, money orders etc. for transferring the money. Bank also provides the facility of Telegraphic transfer or tele- cash orders for quick transfer of money.

• A bank performs a trustworthy business for various purposes. A bank also provides the safe custody facility to the money and valuables of the general public.

Bank offers various types of deposit schemes for security of money. For keeping valuables bank provides locker facility. The lockers are small compartments with dual locking system built into strong cupboards. These are stored in the bank’s strong room and are fully secured.

• Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of the government disbursements like pension payments and tax refunds also take place through banks. 33 There are several types of banks, which differ in the number of services they provide and the clientele (Customers) they serve.

Although some of the differences between these types of banks have lessened as they have begun to expand the

range of products and services they offer, there are still key distinguishing traits.

These banks are as follows: Commercial banks, which dominate this industry, offer a full range of services for individuals, businesses, and governments. These banks come in a wide range of sizes, from large global banks to regional and community banks. Global banks are involved in international lending and foreign currency trading, in addition to the more typical banking services.

Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multi-state area that provide banking services to individuals. Banks have become more oriented toward marketing and sales. As a result, employees need to know about all types of products and services offered by banks. Community banks are based locally and offer more personal attention, which many individuals and small businesses prefer. In recent years, online banks—which provide all services entirely over the Internet—have entered the market, with some success.

However, many traditional banks have also expanded to offer online banking, and some formerly Internet-only banks are opting to open branches. Savings banks and savings and loan associations, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community-based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals. Credit unions are another kind of depository institution.

Most credit unions are formed by people with a common bond, such as those who work for the same company or belong to the same labour union or church. Members pool their savings and, when they need money, they may borrow from the credit union, often at a lower interest

rate than that demanded by other financial institutions. Federal Reserve banks are Government agencies that perform many financial services for the Government. Their chief responsibilities are to regulate the banking industry and to help implement our Nation’s monetary policy so our economy can run more efficiently 4 by controlling the Nation’s money supply—the total quantity of money in the country, including cash and bank deposits. For example, during slower periods of economic activity, the Federal Reserve may purchase government securities from commercial banks, giving them more money to lend, thus expanding the economy. Federal Reserve banks also perform a variety of services for other banks. For example, they may make emergency loans to banks that are short of cash, and clear checks that are drawn and paid out by different banks.

The money banks lend, comes primarily from deposits in checking and savings accounts, certificates of deposit, money market accounts, and other deposit accounts that consumers and businesses set up with the bank. These deposits often earn interest for their owners, and accounts that offer checking, provide owners with an easy method for making payments safely without using cash. Deposits in many banks are insured by the Federal Deposit Insurance Corporation, which guarantees that depositors will get their money back, up to a stated limit, if a bank should fail.

• Introduction of Banking Sector Essay Example
• What Happens if the Bank Fails? Essay Example
• Roles of Banks and Building societies Essay Example
• The Failure of Northern Rock in the Light of Banking Economics and Regulation Essay Example
• Giant Pool Of Money Essay Example
• Bank & Customer Relationship Essay Example
• Page v Gulf Coast Motors Essay Example
• The UK Financial System Essay Example
• Islamic Financing and Banking Essay Example
• Priority Sector Essay Example
• Analysis of the Boy and the Bank Officer Essay Example
• United Bank Corporation Essay Example
• Banking Project Essay Example
• The Performance Of The Irish Abc Bank Commerce Essay Example
• Impact of mobile and internet banking Essay Example
• Commercial Bank essays
• Debit Card essays
• Deposit Account essays
• Subprime Lending essays
• Bank essays
• Banking essays
• Corporate Finance essays
• Credit Card essays
• Currency essays
• Debt essays
• Donation essays
• Enron Scandal essays
• Equity essays
• Financial Accounting essays
• Financial Crisis essays
• Financial News essays
• Financial Ratios essays
• Financial Services essays
• Forecasting essays
• Foreign Exchange Market essays
• Free Market essays
• Gold essays
• Investment essays
• Legacy essays
• Loan essays
• Market Segmentation essays
• Money essays
• Personal finance essays
• Purchasing essays
• Retirement essays
• Shareholder essays
• Stock Market essays
• Supply And Demand essays
• Venture Capital essays

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards.

• Enter your topic/question
• Receive an explanation
• Ask one question at a time
• Enter a specific assignment topic
• Aim at least 500 characters
• a topic sentence that states the main or controlling idea
• supporting sentences to explain and develop the point you’re making
• evidence from your reading or an example from the subject area that supports your point
• analysis of the implication/significance/impact of the evidence finished off with a critical conclusion you have drawn from the evidence.

Unfortunately copying the content is not possible

Tell us your email address and we’ll send this sample there..

By continuing, you agree to our Terms and Conditions .

Current Problems of the Banking Industry Essay

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Introduction

Digitalization period (banking sector), corporate social responsibility, privatizations in banking industry, list of references.

The business environment has undergone numerous revolutions since the 19 th century. Many modern business organizations are now characterized by sophisticated strategies as competition continues to exert more pressure. In fact with the quest to reduce operational costs and achieve marketing efficiencies, critical thinking has become an instrumental value. The ever-growing business sector has imposed a lot of implications for organizational strategies. At the rudimental level, dynamism and uncertainty of the technological, economic and political environments have made company’s see the light of flexibility and responsiveness. (Ed.6 Grant 2007, p.320)

The pace at which these developments are taking place has called for unique responses to certain business strategies. In the current business environment especially in the financial sector, new emerging problems have proved significantly controversial that traditional means can never be employed to achieve the best solution. This has subordinated business entrepreneurs into research specialists as they attempt to devise appropriate mechanisms in order to try solving these problems. In this chapter we look at some of the current problems facing these financial institutions and how they try to counter them. (ed.2 Baylis1987)

Digitalization has affected banking industry in the following ways:

Competition

Competition in the banking sector has gone overboard. The introduction of new and powerful technologies has brought stiff competition in the banking industry where each and every financial organization has an ATM station where customers can go make withdrawals and deposits. Any bank that does not have this feature is likely to be left out as customers try to change their tastes to match those in the current economic world. With increased economic difficulties people are looking for financial institutions where they can be able to carry out their transactions with maximum cost efficiency. Banks would want to take the lead in recouping any benefits associated with adoption of a particular technology. (Beck etal 2000)

Money transfer

The introduction of credit and debit cards has ensured that banking can be done internationally. Business organizations and retail clients can transfer money through technological methods like wire transfers, master cards, visa electrons, express cards etc. This clearly shows how the banking sector has undergone revolution. Due to intense pressure from other small financial organizations any banks must change in order to continue being in operation. (Berger 2003)

Communication

Technology has transformed the whole world into a global village where communication across the international borders is possible within few seconds. Banks have ensured that communication between domestic branches as well as international is steadfast and important information can be sent and received via mails, websites and etc. Using laptops sales representatives can sell various bank policies and feedback sent to the headquarters online. Many banks are now moving towards virtual recruiting where they can be able to access the personal details of the candidates sought through online recruitment process. This eliminates lengthy normal interview processes characterized by paperwork. (Devlin 1995)

Under the notion of Strategic fit, a firm is looked at in terms of its social environment as well. Management scholars once argued that the survival of every organization depends on its acceptability among customers, readiness and willingness of its staff to use their expertise and creativity in its service. This implies that an organization is a social setting that is comprised of social beings and at the same time depends on the society as well. Social responsibility has been one of the biggest challenges for big and small size organizations. Many banks have begun feeling the pressure and are actually plying their cards safe. Recently there are quite a number of financial institutions which are sponsoring charitable organizations. Barclays bank is undertaking so many environmental conservation projects. (CSR wire 2008)

Standard Chartered Bank is known to support many social events including sports where it has sponsored many athletic championships. An example of this includes the Boston marathon, Beijing and Olympic events. In Kenya for example Kenya Commercial bank is a major sponsor of a program dubbed Mercy Train. This is a program aimed at ensuring that the less fortunate and hungry people are fed by a donation received from well-wishing organizations and persons. (Devlin 1995)

Because banking institutions are private businesses with different shareholders, following the Enron scandal that left so many shareholders bankrupt, it is in the best interest that banks have initiated ethical practices including corporate governance, social ethics and etc. These practices are geared towards securing investors’ confidence so that they can develop a person that the activities of the organization are credible and transparent. (Berger 2003)

This is one of the current trends in business; most banking organizations are now finding it increasingly strategic to join hands in the private sector than in corporations. Mergers and acquisitions have become the order of the day in business. One of the reasons that make banking organizations adopt this strategy is that there is a strong belief that privately-owned organizations are more cost-efficient than in the public sector. (JPMorgan 2008)

Secondly mergers and acquisitions create a platform for competitive advantages. This has been seen in many banking organizations as they try to form a formidable force to counter their rivals i.e. the Bank of India and the Bank of Africa recently agreed to share one banking network, the AIM alliance between the Apple and the Microsoft. The businesses are now trying to retreat under the anonymity afforded by private ownership. Business anonymity ensures that business strategy is not susceptible to any exposure. This will in turn make the business remain ever competitive. (Steven, et al 2006)Private organizations are more flexible and can therefore adapt to any kind of an environment. This makes the private entities to be more responsive to both local and international market needs.

Banks should ever remain conscious about the current digital era, look into the effects of the current technological advancement and review their strategy to determine if they are up to date and where possible make necessary adjustments. Strategy should now be tailored towards the needs of the business if maximum potential is to be achieved.

Beck, T etal 2000, Finance and the Sources of Growth, Journal of Financial Economics, Vol 58, no 1-2, pp.261-300.

Berger, A.N 2003, The economic effects of technological progress: Evidence from the Banking industry, Journal of Money, Credit, and Banking , Vol 35, no 2, pp.141-176.

Baylis, J (ed.2) 1987, Contemporary Strategy, Taylor & Francis, ISBN 0709950713, 9780709950714.

CSR wire 2008, The Latest Corporate Social Responsibility News –Banking on Sustainability, Web.

Devlin, J.F, 1995, Technology and Innovation in Retail Banking Distribution, International Journal of Banking Marketing, Vol 13, no 4, pp.19-25

Grant, R (ed.6) 2007, Contemporary strategy Analysis, Wiley, John & Sons, Incorporated, pp.210-496, ISBN-13: 9781405163095.

J.P.Morgan.2008, Private Banking , Web.

Steven F, Damien N, Paul S & Anita T,2006, Market entry, privatization and bank performance in transition, Journal compilation © 2009 The European Bank for Reconstruction and Development ,Vol.14,no.4,pp.579-610.

• The Effects of Digitalization on Art
• An Investigation of the Sustainable Benefits of Agency Banking in Kenya
• How Marriott Might Expand Into Kenya
• A Turnaround Strategy for Able Corp.
• Able Corporation – A Strategic Direction
• Driving Forces for a Business Organization
• Strategies for Exiting International Operations: Challenges and Solutions
• Airline Mergers in Today's Legal Environment
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2021, November 3). Current Problems of the Banking Industry. https://ivypanda.com/essays/current-problems-of-the-banking-industry/

"Current Problems of the Banking Industry." IvyPanda , 3 Nov. 2021, ivypanda.com/essays/current-problems-of-the-banking-industry/.

IvyPanda . (2021) 'Current Problems of the Banking Industry'. 3 November.

IvyPanda . 2021. "Current Problems of the Banking Industry." November 3, 2021. https://ivypanda.com/essays/current-problems-of-the-banking-industry/.

1. IvyPanda . "Current Problems of the Banking Industry." November 3, 2021. https://ivypanda.com/essays/current-problems-of-the-banking-industry/.

Bibliography

IvyPanda . "Current Problems of the Banking Industry." November 3, 2021. https://ivypanda.com/essays/current-problems-of-the-banking-industry/.

Empower students to do their best,

Original work, advance learning with an ai writing detection solution built for educators.

Our advanced AI writing detection technology is highly reliable and proficient in distinguishing between AI- and human-written text and is specialized for student writing. What’s more, it’s integrated into your workflow for a seamless experience.

Student success starts here

Uphold academic integrity.

Ensure original work from students and safeguard the value of writing.

Assessments with transparency into AI usage

Flexible solutions enabling educators to design and deliver student assessments their way, while shaping AI-enhanced student writing with integrity and confidence.

Foster original thinking

Help develop students’ original thinking skills with high-quality, actionable feedback that fits easily into teachers’ existing workflows.

Customer stories

University of leeds widely adopts gradescope for online assessment.

With campuswide digital transformation in mind, rollout to thousands of faculty across disciplines took only two months, far quicker than anticipated.

University of Maryland Global Campus builds a culture of academic integrity by pairing policy with technology

Keeping student and instructor needs at the core is key to upholding their rigorous standards of integrity while centering students in their learning.

Solutions made just for you

See solutions for higher education.

Prepare students for success with tools designed to uphold academic integrity and advance assessment.

See solutions for Secondary Education

Help students develop original thinking skills with tools that improve their writing and check for similarities to existing works.

See solutions for Research and Publication

The rigorous academic research and publishing process gets a trusted tool to ensure the originality of scholarly work.

Keep integrity at the core of every assessment.

Everything you need no matter how or where you assess student work.

Feedback Studio

Give feedback and grade essays and long-form writing assignments with the tool that fosters writing excellence and academic integrity.

Originality

Check for existing as well as new forms of plagiarism - from text similarity and synonym swapping to contract cheating, AI writing, and AI paraphrasing.

Grade paper-based, bubble sheet, and code assignments faster than ever while giving more robust feedback and gaining valuable insights.

Address potential gaps in curriculum and assessment to prepare students for their careers and meet accreditation requirements.

This robust, comprehensive plagiarism checker fits seamlessly into existing workflows.

iThenticate

Screen personal statements for potential plagiarism and ensure the highest level of integrity before matriculation.

The Turnitin difference

Complete coverage.

Your coverage is comprehensive, with the largest content database of scholarly content, student papers, and webpages.

Extensive Support

Have the help you need with 24/7 tech support, curricular resources created by real educators, and customized training and onboarding services.

Human-Centered AI

Our people-centered approach to artificial intelligence improves academic integrity and makes assessment better for all.

Unparalleled Access

Access Turnitin tools at scale through integrations with over 100 systems in the educational ecosystem.

Further Reading

The Plagiarism Spectrum 2.0 identifies twelve types of unoriginal work — both traditional forms of plagiarism and emerging trends. Understanding these forms of plagiarism supports the development of original thinking skills and helps students do their best, original work.

An educator guide providing suggestions for how to adapt instruction when faced with student use of AI.