Major Issues of Banking Introduction The Indian financial

Major Issues of Banking

Introduction � The Indian financial system has been broad based as well as expanded and gained a solid foundation during the last two decades. � It is characterized by the predominance of public sector institutions and a high degree of regulation, motivated mainly by socioeconomic considerations. � In the process, certain rigidities and weaknesses have developed in the system. � Major issues in the Indian financial system to play its role in ushering in a more efficient and competitive economy.

Progress in Some Sphere � The Indian banking system has made a commendable progress in extending its geographical spread and functional reach. � The spread of the banking system has been a major factor in promoting financial intermediation in the economy and in the growth of financial savings. � The credit reach is also has been extensive and the banking system now caters to several million borrowers especially in agriculture and small industry. � The Development Financial Institutions (DFIs) � Established themselves as a major institutional support for investment in the private sector.

� Despite the commendable progress, serious problems have emerged, reflected in a decline in productivity and efficiency, and erosion of the profitability of the banking sector. � Major factors responsible for these are: a. Directed investments b. Directed credit programmes

Major Issues � The major issues of Indian finan`cial system area. Bank capital adequacy b. Income recognition c. Profitability d. Capital market e. Banking reforms f. Supervision and g. Consolidation of the Indian Financial sector.

Bank Managment Objectives of bank management 1. To organize the structure to meet the challenges of changing environment. 2. To improve customer services. 3. To introduce new schemes. 4. To improve housekeeping. 5. To improve technology in banks. 6. To modernize office equipment. 7. To train employees on an ongoing basis. 8. To improve work ethics. 9. To improve the quality of banking services. 10. To improve the health of the organization. 11. To imbibe value system.

11. To improve productivity through participative management. 12. To improve inspection and special audit. 13. To follow instructions and stick to rules and guidelines. 14. To rise above and serve the community. 15. To utilize human resources for improving quality of life. 16. To develop leadership and entrepreneurial spirit among the cadre. 17. To motivate employees to work efficiently, productively and profitably. 18. To evolve a unique monitoring and controlling system. 19. To improve the image and strengthen the confidence of the people in the system.

Evolution of Management Environment in Banks. Pre- 1979 -84 Coping managing Stbility with change 1984 -87 Managing change 1988 -91 Managing diversity. Control Management Participative Management Differential Management Diversification Process began in the banking system. It is an era of specialization and consideration Management By Objectives

Basics functions of Management � Planning � Organizing � Staffing � Directing � Motivating � Controlling � Co-Ordinating � Communicating

Functional Areas of Bank Managment Deposit Mobilization � Financial Management � Project Evaluation � Credit Management � Credit Planning � Liquidity Management � Investment management � Organization Management � Personnel Management � Marketing Management � Office Management � Maintenance Management � Information management � Legal Management � Portfolio Management � Assets Management �