A POLICY RESEARCH ON ALTERNATIVE BUSINESS MODELING SOLUTIONS THROUGH COMPOSITE BANKING STRUCTURE
Publication Date : 01/09/2018
Banking industry is one of the major business undertakings of India and as such plays a vital role in the economic development of our country. Not only that it has a social responsibility too to cater to the needs of everyone in the country as everybody is equal as evidenced by the ‘one man one vote’ principles of our democracy. There was a time when an account holder in a bank considered himself to be a privileged person. But now the banks feel privileged when their number of account holders escalates. That means more and more people are enjoying bank services. Still the question remains whether all of those who need banking services are enjoying at an affordable cost. The answer to the question is not definitely ‘yes’. The bank services must reach every one; the tiller, the weaver and the mason. Earlier a customer is a customer to one branch, now thanks to the development in technology and innovation (especially frugal/indigenous innovation) like core banking solution, mobile wallet etc.; he/she becomes customer to the banking industry; consolidation is happening everywhere, especially in delivery channel, a bank has shrunk to a chip card, and you can access any of 2.04 Lakh ATMs and 1,38,850 branches spread over the length and breadth of the country or your smart hand phone device for mobile applications. Now the banking is in the era of ‘banking transactions’ to ‘transaction banking’. In the back ground of different flavours of banking like unit banking, branch banking, small banks, medium sized banks, big banks, cooperative banks, local area banks, payment banks, etc., growth is faster now, but the growth is a positive growth or cancerous growth, we have to check. The Indian banking industry is witnessing a bleak scenario in its history, in terms of its bad loans/debts to the tune of around 10 Lakh Crore. Some may justify it is due to the impact of 2009 slump and the other macroeconomic reasons. But it’s a question mark of systemically important banks, like the nation’s big banks are also saddled with bad loans, in this scenario the moot point we have to contest is whether it is ‚too big to fail vs. too big to bail out‛ in the name of banking consolidation. It is the probable time to contemplate that we need any change in the current banking structure. The recent announcement of the government that three public sector banks will be amalgamated, it is not that we are experimenting with the identity crisis of these banks in question, but we are talking about the financial soundness of the DNAs of these banks in general. In the Policy research, the statement of the problem is that there is a strong need for ideological changes in the current banking structure or the banking business model in pursuit. The author suggests composite banking structure to stitch an innovative business model with operational model.
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