2.

REVIEW OF LITERATURE

Banking is a prime mover in the economic development of a nation and research is so

essential to improve its working results. The management without any right policy is like
"building a house on sand". It means an effective management always needs a thorough
and continuous search into the nature of the reasons for, and the consequences of
organization. In line with this, some related earlier studies conducted by individuals and
institutions are reviewed to have an in-depth insight into the problem and exploring the
reformation of banking policy. The main theme and essence of few relevant studies are
presented below. Kohli (2001) emphasized on the importance of technology. According to
him, technology is emerging as a key-driver of business in the financial services industry.
The advancement in computing and telecommunications has revolutionized the financial
industry and banking on the net is fast catching on. As e-commerce gets transformed into
e-commerce with the increasing use of technologies like WAP, banking business is in for a
major overhaul. Anuradha (2001 ) stated that "the need for the change of Indian banks and
the forces behind the change like globalization, liberalization, international trade,
technology revolution etc., The study also highlights various consequences that are to be
faced by the Indian banks if they remain unchanged". Shri S.R. Mittal (2001) Chairman of
Committee on Intemet Banking, Constituted by R.B.I, strongly urged to use the fast
growing Internet medium in banking transactions. The Government of India set up a nine-
member committee under the chairmanship of Narasimham, former Governor of Reserve
Bank of India. He is to examine the structure and functioning of the existing financial
system of India and suggest financial sector reforms.

The report of the committee was tabled in the Parliament on December 17, 1991
chairmanship of Sri M. Narasimhan to recommend reforms for Indian banking sector.

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Reviewing the developments that have taken place during the period 1991-98, the
committee made recommendations for reforming the banking sector. Chowdary Prasad
(2002) compared the 1991 economic reforms of India with that of China that took place in
1998. He has stated "Reforms in India have just been a decade old but there have been
numerous changes in political set up, industrialization policies, legal reforms, privatization,
etc.," B. Janki (2002) pointed the effect of technology on labor productivity.

There is no doubt that banking needs to upgrade technology to improve operating

efficiency, and customer services. The study concludes that harnessing employee
technology synergy is crucial for unleashing productivity and reaching out to the huge base
of retail customers, who are also dispersed in rural and semi-urban areas. Banks can use
technology to address customer needs and improve their interaction with customers,
keeping in touch through telephone and the Internet.

Rao (2002) has analyzed the impact of new technology on banking sector. The advent of
technology in terms of both computers and communications has been changing totally the
ways and doing of banking business. Technology has opened new vistas and in turn
brought new possibilities every day for doing the same work differently and in a most cost-
effective manner.

Aloka Majumdar (2003) stated that, "Emerging trends have got a lot to do with the
changes in the structure of the banking system. The second and equally important area,
where banks are banking on other of their skill, is on the retail side".

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Aditya Pun (2003) said, "Technology has enabled banks to target customers, and provide
customized products and services to match their individual requirements. The winners
will be those banks that make optimum utilization of available technology to innovate,
offer customized products and services, and make the most of the resources at their
disposal".

Pramod Guptha (2003) said, "Both public and private banks are spending large amounts
of money on technology to provide innovative products and services to their customers
with more convenience and satisfaction. Technology is reducing the cost of transaction
and helping to increase customer base and enable wider reach".

T.Uma Maheshwari Rao and L Hymavathi {2005) stated the importance of internet
usage for banking worldwide and its relevance in Indian scenario To compete the present
banking business the banks were transforming themselves and conducting their business
electronically. This transformation leads to normalbanking to electronic banking, enabled
customers to transact online, while saving on various factors. Normal Banking activities
still prevails in developing countries like India.

Guillen and Tschoegi (2008) Traditional banks accepted the change in their functioning
in order to be more receptive to the worldwide market demand for new financial product
in new competitive market.

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SCOPE OF THE STUDY

The main scope of this study is confined to “A Study on Recent Trends in Banking
Sector in India’’ . The Indian insurance industry has undergone transformational changes
since 2000 when the industry was liberalized. With a one player market to 24 players in
13 years, the industry has witnessed phases of rapid growth along with extent of growth
moderation and intensifying competition. There have also been number of product and
operational innovations necessitated by consumer need and increased competition among
the players. Changes in the regulatory environment also had path-breaking impact on the
development of the industry. While the insurance industry still struggles to move out of
the shadows cast by the challenges posed by economic uncertainties of the last few years,
the strong fundamentals of the industry augur well for a roadmap to be drawn for
sustainable long-term growth. 

There was exponential growth in the first decade of insurance industry liberalization the
back of innovative products and aggressive expansion of distribution, the life insurance
industry grew at jet speed. However, this frenzied growth also brought in its wake issues
related to product design, market conduct, complaints management and the necessity to
make course correction for the long term health of the industry. Several regulatory
changes were introduced during the past two years and life insurance companies adopted
many new customer centric practices in this period. Recent Industry Trends Part 5 Indian
Insurance Industry: Reaching out to Exponential Growth.

Recent trends in the Indian Insurance Sector a. Bancassurance is emerging as a major

channel for distribution of insurance products- Bancassurance means selling insurance
product through banks. Banks and insurance company come up in a partnership wherein
the bank sells the tied insurance company's insurance products to its clients. Globally,

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bancassurance has emerged as an important channel for distribution of insurance
products.

Recent trends in the Indian Insurance Sector In India, the concept of bancassurance was
first introduced in 2000 when insurance sector was opened for the private sector. Post
2010, bancassurance has emerged as a major channel for distributing insurance products
given their reach with retail customers. the bancassurance model received a further push,
with the insurance regulator notifying a new framework for corporate agents, which
allowed banks to tie up with up to three insurers each in life, non-life and health
insurance segments to increase the penetration.

Recent trends in the Indian Insurance Sector b. Growing online channel is quickly
emerging as a cost effective model for distribution of insurance products Insurance
companies are also exploring other cost-effective modes of distribution such as the
‘online channel’. As per estimates by BCG, in life insurance, term plans are the most
bought product online, while in non-life, it is motor, health and travel insurance. The
online market has grown six to seven times in the past six to seven years.

Recent trends in the Indian Insurance Sector c. Launch of new and innovative products
with high levels of customization With the passing of the Insurance Laws (Amendment)
Bill 2015, the sector has witnessed a fresh inflow of capital, and introduction of new and
innovative products. Post the approval of 49 per cent direct foreign investment in the
sector, new players have entered the market leading to more, general insurance players
are offering a customized insurance plan based on certain fixed parameters and
guidelines. Recent trends in the Indian Insurance Sector d. Digital technologies are

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expected to transform insurance business- The role of technology has brought about a
major change in the sector.

platform-based ecosystems and artificial intelligence will significantly change and

transform the very nature of the insurance industry. The emerging digital technologies-
intelligent automation, liquid workforce, platform economy, predictable disruption and
digital trust are offering insurers an opportunity to shift from their traditional business
model to automated models which they can automatically assess and price risk directly,
individually and in real-time. This digital transformation in insurance companies will
involve continuous disruption to existing business models, products.

Recent trends in the Indian Insurance Sector Digital services offer convenience, choice
and comparison. Digital technologies can be rooted across the core elements of the
insurance value chain, right from product development to claim settlement. Many
Insurers are now using technology to track all its potential claims, thereby speeding up
claim verification. Moreover, these technologies enable insurers to leverage historical
data for predicting future patterns so as to gain a deeper understanding of the emerging
needs of their customers, partners and employees. This information can be used to build a
suitable digital strategy.

As a part of their digital strategy, increasing number of insurance companies are

developing mobile applications to meet the growing demand for real time services among
smartphone users. The mobile applications also offer a significant potential for enhancing
customer service experience in the form of speedier sales closure, better access to policy
details and making hassle-free renewal payments. As per a recent EY global Digital
Survey it was found that insurers who developed a digital strategy were more successful

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than their competitors at reducing customer service costs while increasing customer
loyalty.

Private insurers gained market share mainly because of high growth recorded in
bancassurance channel. Moreover, rationalization & transparent pricing along with the
smart interplay of digital and technology push has helped private insurers to market and
deliver products better than before, thereby resulting in an increased share in the overall
business.

Recent trends in the Indian Insurance Sector f. Regulatory reforms to promote a

competitive environment in both the life and non-life insurance sectors The regulatory
framework in the country aims at providing transparency, simplifying products and
services and creating a favorable business environment for all the stakeholders in the
insurance sector. However, the recurring changes in regulations continued to upset the
business models of many insurers during the last 10 years.

Recent trends in the Indian Insurance Sector Insurance Laws (Amendment) Act 2015:
This regulation has had a favorable impact on insurers in multiple ways- a) Increase in
insurance FDI limits- The Insurance Laws (Amendment) Bill was passed in March 2015,
increasing the FDI limit to 49 per cent from 26 per cent. This move was aimed at
bringing in more foreign capital, technical know-how and exposure to global best
practices for the Indian insurance industry. The increase in foreign investment cap has
already brought in nearly Rs. 15,000 crore into the domestic insurance sector in the past
year. Post the announcement, many global majors have evinced interest in raising stake in
their Indian subsidiaries.

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3. RESEARCH METHODOLOGY

The data used for this study is secondary data comprising of various websites, articles and
magazines. Since the data used is secondary it is more efficient and reliable.

INDIAN BANKING SECTOR

Indian Banking sector is one of the oldest and most popular sector in stock market point
of view. It is also one of the largest in terms of market capitalization in Indian stock
market. Banking sector is such a sector which is either liked by investors or disliked by
investors but there is no middle ground. There are many investors whose portfolio is
heavily loaded with banking and finance stocks and at the same time there are some big
investors they don’t touch banking stocks.

The Indian banking system consists of 27 public sector banks, 26 private sector banks,
46 foreign banks, 56 regional rural banks, 1,574 urban cooperative banks and 93,913
rural cooperative banks, in addition to cooperative credit institutions. Public-sector banks
control more than 70 per cent of the banking system assets, thereby leaving a
comparatively smaller share for its private peers. As per the Reserve Bank of India (RBI),
India’s banking sector has sufficient capital and well-regulated.

The financial and economic conditions in the country are far superior to any other
country in the world. Indian banking industry has recently witnessed the roll out of
innovative banking models like payments and small finance banks.

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INVESTMENTS/DEVELOPMENTS

Key investments and developments in India’s banking industry include:

1. The bank re capitalisation plan by Government of India is expected to push credit

growth in the country to 15 per cent and as a result help the GDP grow by 7 per cent
in FY19.
2. Public sector banks are lining up to raise funds via qualified institutional
placements(QIP), backed by better investor sentiment after the Government of India’s
bank recapitalization plan and an upgrade in India’s sovereign rating by Moody’s
Investor Service.
3. The RBI amends statutes thereby allowing lenders to invest in real estate investment
trusts (REITs) and infrastructure investment trusts (InvITs) not exceeding 10 per cent
of the unit capital of such instruments.

Government Initiatives

The Government of India is planning to introduce a two percentage point discount in the
Goods and Services Tax (GST) on business-to-consumer (B2C) transactions made via
digital payments. A new portal named ‘Udyami Mitra’ has been launched by the Small
Industries Development Bank of India (SIDBI) with the aim of improving credit
availability to Micro, Small and Medium Enterprises’ (MSMEs) in the country. The
government and the regulator have undertaken several measures to strengthen the Indian
banking sector.

Government of India has unveiled a two-year plan to strengthen the public sector banks
through reforms and capital infusion of Rs 2.11 lakh crore (US$ 32.5 billion). That will
enable these banks to play a much larger role in the financial system and give a boost to
the MSME sector. In this regard, the Lok Sabha has approved recapitalisation bonds
worth Rs 80,000 crore (US$ 12.62 billion) for public sector banks.

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Baking sector performance in FY17

FY17 (refers to period from April 01 to March 31) was yet another challenging year for
Indian banks with decline in credit growth, continued stress on asset quality, high
provisioning costs resulting in declining profits and high requirement of capital for
growth and compliance with stringent regulatory requirements. As per the revised
estimates of CSO, the GDP growth during FY17 is expected to be 7.1% which was lower
than 8.0% during FY16.

Business Growth

Credit growth was at record low due to decline in demand and asset quality pressures.
Credit growth in India has seen a declining trend over the last three years due to decline
in economic activity leading to moderation in industrial output, demand and asset quality
overhang making banks cautious in lending. During FY17, credit growth was at 4.7%
which was lowest in growth rate in over a decade.

Asset Quality

Deterioration in asset quality continued but pace of stressed assets addition

declinedGross NPA ratio of private sector banks near doubling from 2.11% as on March
31, 2015 to 4.19% as on March 31, 2017. As compared to PSBs, the private sector banks
continued to have strong net worth coverage to Net NPA with Net NPA to Net worth
ratio of 13.03% as on March 31, 2017 as compared to high 77.52% for PSBs.

Earnings and Profitability

Profitability of the banks saw declining trend due to worsening of asset worsening

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of asset quality Slow credit growth. Deterioration in asset quality impacted the income
growth of banks as well as profitability during FY17. The 35 banks studied by CARE
Ratings showed moderate growth of 6% due to interest reversals on NPA accounts as
well as a low credit growth.

RECENT TRENDS IN BANKING AND INSURANCE SECTOR.

1) Focusing on innovation to retain and enhance competitive differentiation.

According to Capgemini, new Fintech firms are creating danger to traditional financial
institutions, in order to handle with them aggresive approach is required to develop
innovative offerings.

2) Change ways of transactions.

Electronic payment services, Real Time Gross Settlement, electronic fund transfer,
electronic clearing services, ATM’s point of sale terminal, m-banking, these are some
new ways that changed the way of online advisory services, and cross-processes with
Banks etc resulting into multi-distribution, product innovation, claim management etc.

3) Financial inclusion, business growth and customer engagement .

Urban India is well versed with Banking system but there is need to pay more focus on
rural Banking hence there is huge portion of the population that is un banked or say under
banked, requires financial literacy.

With the help of Government, Indian Banks are focusing on it to increase the business
growth as well as to get participated each and every individual under banking system.
According to parliament. announcement in 2013 insurance penetration in India at 3.9%
was below the world average 6.3%.

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Fig no:3.1

KEY FEATURES OF BANKING AND INSURANCE SECTOR

Indian Banking and Insurance system is very well structured. It pay emphasis on need of
each sector of country adding to advancement of economy. Starting from RBI, an apex
body, commercial banks, co-operative banks, Regional Rural banks, Development
Banks, Specialized Banks and most recently government initiative MUDRA i.e. Micro
Units Development and Refinance Agency Bank for new start-

ups, takes into consideration every part i.e. commercial, trade, import-export, agricultural
improvements.

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 1) Dominance of Public sector

Public sector Banks and institutions are institutions in which majority of shares is owned
by government. There are total 27 PSB’s in India while LIC is the only public sector life
insurance company with 6 non-life public sector insurers. People choose these
institutions in spite of private institutions. Public and regulatory framework is the
prominent cause for dominance of public sector. Insurance (amendment) Act, 2015
changed percentage of ownership from 29% to 49% still public sector has the main
character.

2) Perfect regulatory framework

Indian Banking and Insurance industry is wholly regulated by RBI and IRDA established
in year 1935 and 1999 respectively With a perfect structure that can reach up to every
single Indian paying attention to the interest of general public. With quarterly monetary
policies RBI manages the money supply in the economy. While mission statement of
IRDA clearly shows fast and orderly growth of insurance sector and optimum self-
regulation.

3) Huge employment avenues

India Banking and Insurance sector has been always the most favored avenues of
employment. According to the McKinsey report on Banking, Indian banking sector has
the potential to account 7.7% GDP with avenues of job over 2 million.

As per 2012-13 Government data, life and non-life insurance has provided employment
to 18.27 lakhs (11.54 lakh Life and 6.73 lakh non-life) Indian population
contributing to run economic cycle of India continuously.

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 4) Great contributors to Indian economy in service sector

The main Change ways of transactions: Electronic payment services, Real Time Gross
Settlement,reason behind this is the changing customer demographics and expectations.
electronic fund transfer, electronic clearing services, ATM’s point of sale terminal, m-
banking, these are some new ways that changed the way of banking practices. In same
way Insurance companies now a day's also using online payment, telephonic and online
advisory services, and cross-processes with Banks etc resulting into multi-distribution,
product innovation, claim management etc.

Financial inclusion, business growth and customer engagement: Urban India is good with
Banking system but there has to emphasis more focus on rural Banking hence there is
sizable portion of the population that is un banked or say under banked, needs financial
awareness.

Key investments and developments in India’s banking industry include:

 As of February 21, 2022, the number of bank accounts—opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’—reached
44.63 crore and deposits in the Jan Dhan bank accounts totalled Rs. 1.58 trillion (US$
21.25 billion).

 On November 09, 2021, RBI announced the launch of its first global hackathon
'HARBINGER 2021 – Innovation for Transformation' with the theme ‘Smarter Digital
Payments’.

 In November 2021, Kotak Mahindra Bank announced that it has completed the
acquisition of a 9.98% stake in KFin Technologies for Rs. 310 crore (US$ 41.62 million).

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 In July 2021, Google Pay for Business has enabled small merchants to access credit
through tie-up with the digital lending platform for MSMEs—FlexiLoans.

 In December 2020, in response to the RBI’s cautionary message, the Digital Lenders’
Association issued a revised code of conduct for digital lending

fig no:3.2

Banking sector outlook for india in 2021.

 In 2019, banking and financial services witnessed 32 M&A (merger and acquisition)
activities worth US$ 1.72 billion.

 In March 2020, State Bank of India (SBI), India’s largest lender, raised US$ 100 million
in green bonds through private placement.

 In February 2020, the Cabinet Committee on Economic Affairs gave its approval for
continuation of the process of recapitalization of Regional Rural Banks (RRBs) by

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providing minimum regulatory capital to RRBs for another year beyond 2019-20 - till
2020-21 to those RRBs which are unable to maintain minimum Capital to Risk weighted
Assets Ratio (CRAR) of 9% as per the regulatory norms prescribed by RBI.

The major trends that are expected to influence the Indian banking sector in
present scenario are:

Digital-only/Virtual Banking:

Digital-only banks are paperless, branchless and signatureless. In India, these banks are
running on the Aadhar’ s infrastructure and providing end-toend services through digital
platforms like mobile, tablets and internet. ISSN NO: 0975-6876 .

Biometric Technology:

Linking of Aadhaar number to accounts has enabled banks to recognise their customer by
evaluating one or more distinguishing biological traits like face, hand, retina, voice and
ear features in wake of an issue. The growth of such technology is far more reliable and
will continue to spread across in the times to come, since it can eliminate the requirement
of multiple passwords and PINs.

Artificial Intelligence:

Artificial Intelligence has provided personalised services by dealing with each customer
and focusing on his or her specific requirements. It will be used to collect information
and automatically build models based on that information. Large banks have already
introduced this in their services, others are likely to follow.

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Block chain Technology:

NITI Aayog is creating ‘India Chain’- India’s largest block chain network, to reduce
fraud, speed up contract enforcement and increase transparency in India. As Block chain
is virtually un-hackable due to time stamps that mark a data entry in a distributed ledger,
banks will explore options to leverage the power of block chain to transform backend
operations.

Bitcoin:

In India, the RBI hasn’t yet authorised the use of bitcoins cautioning the users, holders
and traders of bitcoins about the potential financial, operational, legal, customer
protection and security related risks. Despite this, bitcoin exchange platforms like BTCX
India, Coin secure, Uno coin and Zebpay are operating in India.

Augmented Reality:

Today, AR mobile app has been launched by banks listing all dining destinations,
property lists, shopping centres, bank ATMs and branches etc. with pictures along with
distance and directions. It is majorly prevalent in the private banking sector as of now.
Going forward, installation of Bluetooth beacons at bank branches will allow banks to
integrate physical and mobile channels to provide effective communication.

Cloud and IOT Technology:

It is the only technology that supports many other disruptive technologies such as big
data, artificial intelligence (AI), and block chain. Banks have begun to realise the degree
of agility it brings into business, a fact that has already been evident through the success

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of FinTech companies. As a result, business models for banks in the future are expected
to give much greater emphasis to cloud computing.

It has, therefore, been decided by the Reserve Bank of India that all system providers
shall ensure that the entire data relating to payment systems operated by them are stored
in a system only in India. Competition, technology, increased customer demand for
comfort and convenience and regulatory initiatives have resulted in the introduction of
several payment products and channels over the time and shall continue to do so.

This paper tries to look into Banking and Insurance sector of India, the study for this
paper is based on secondary data. The data is collected from various sources like various
reports published on Banking and Insurance sector, reports and information published by
IRDA and RBI, relevant statistical study for numbers and study of previous research
papers published on Banking and Insurance sector. Well structured sectors: Indian
Banking and Insurance system is very well structured one.

Key features of Indian Banking and Insurance Sector focuses on need of each part of
country contributing to growth of economy. Starting from RBI, an apex body,
commercial banks,co-operative banks, Regional Rural banks, Development Banks,
Specialized Banks and most recently government initiative MUDRA i.e. Micro Units
Development and Refinance Agency Bank for new start-ups, takes into consideration
every part i.e. commercial, trade, import-export, agricultural upliftment.

In same way as per the instruction of IRDA Insurance policies are mainly focusing on
consumer interest, use of technology, perfect Dominance of Public sector.

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Insurance (amendment) Act, 2015 changed percentage of ownership from 29% to 49%
still public sector is in main role second thing is that data says that Perfect regulatory
framework: With a perfect structure that can reach up to every single Indianprivate sector
contributed only 13% and 14% share in life and non-life from inception till today.

Indian Banking and Insurance industry is perfectly regulated by RBI and IRDA
established in year 1935 and 1999 respectively; focusing on securing the interest of
country people. While mission statement of IRDA clearly indicates speedy and orderly
Huge employment avenues: India Banking and Insurance sector has been always the
mostgrowth of insurance sector and optimum self-regulation. preferred avenues of
employment.

According to the McKinsey report on Banking, Indian banking sector has the potential to
account 7.7% GDP with avenues of job over 2 million. Ilife and non-life insurance has
given employment to 18.27 lakhs (11.54 lakh Life and 6.73 lakh non-life) Indian
population contributing to run Great contributors to Indian economy in service sector:

According to Insurance penetration of India economic cycle of India uninterruptedly.

Both sectors are young as it has huge potential to capture has potential to account 7.7% of
GDP and this is really a healthy sign for Indian economy.

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Fig no:3.3

CHALLENGES BEFORE BANKING AND INSURANCE SECTOR

Banking sector:

gross NPA at 7.6%, highest in past 12 years and expected to rise further to 8.5% by 2017.
Lending to those that are not capable of revival, no due-diligence mostly by PSB’s,
corruption and such other economical issues like unemployment, natural calamities are
Near about 69% of Indian population resides in remote rural area and delivering financial
main causes of rising NPA’s in India.

services to them at affordable cost of such disadvantaged and low-income segment of

society is currently the main challenge. According to 2008 report on Financial Inclusion
by Dr. C. Rangrajan, over 73% of farmers currently do not have access to Banks and
Banking system. efficiency with standards is a great challenge for Indian Banking sector.

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Data breach, lower safety to customer information leading to reduce trust in online
transactions. So even though we are trying to achieve banking convenience its becoming
impossible and still we are Non-life insurance sector is very weak, 21.5% insurance
business in terms of premium.

Insurance Sector:

experiencing rush at banks for transaction. collected in comparison of 78.5% of life

insurance business. Total insurance penetration in India showing very slow changes as it
was 1.5% in 1990, 2.88% in 2003 and 3.30% in There is still difference between
expected performance and actual performance by 2014-15.

Deciding right price of product, premium, cost and claims at future date is very
challenging insurance players resulting into greater customer dissatisfaction. task. Long-
term sustainability as well as return on equity is main points that one can look Sudden
regulatory changes are having negative impact on product segment.

Industry into for perfect pricing. Distribution channels is still great challenge for
insurance industry, agents need to upgrade needs to incorporate huge modification to
sustain the impact of regulatory changes. themselves, agents inability to penetrate rural
area, virtual threats to agents are main points must be looked into.

Feasible Measures for Improvement of Banking and Insurance Sector in India

Triggering demand drivers is the primary and vital measure, for Banking Market
dynamics, Technology and Household savings are the main triggering factors that need
special attention .

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186 International Journal of Advanced Research in Commerce, Management &
Operating expenses of public sector banks are much higher than private Banks it has to be
Social Science (IJARCMSS) - July- September, 2019 Entry of foreign players
somewhere threatening Indian players. So competence needs to be Strict policies have to
be made for customer defaults.

looked into. Mentality of India population is still worst about insurance sector and
distribution channels are accepted. Insurance sector is spending more on distribution i.e.
agent have to travel to customer, convince designed in such a way that products have to
be bought and not to be sold. him/her so tying to SHG’s, co-operative Banks, RRB’s and
such ways will cut cost of Inflation, income per capita income and such other economic
factors have great impact ondistribution.

insurance industry so collective efforts by Government with insurance players need to be

taken Variety of insurance product, lower premium, short-term contract, confidence in
agent will also to resolve growth issue. help insurance industry to grow well.

Some of the key trends in the industry emerging after the regulatory changes are as
follows :-

1. India with about 200 million middle class household shows a huge untapped potential
for players in the insurance industry. Saturation of markets in many developed economies
has made the Indian market even more attractive for global insurance majors. The
insurance sector in India has come to a position of very high potential and
competitiveness in the market. Indians, have always seen life insurance as a tax saving

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device, are now suddenly turning to the private sector that are providing them new
products and variety for their choice.

2. Consumers remain the most important centre of the insurance sector. After the entry of
the foreign players the industry is seeing a lot of competition and thus improvement of
the customer service in the industry. Computerization of operations and updating of
technology has become imperative in the current scenario. Foreign players are bringing in
international best practices in service through use of latest technologies.

3. The insurance agents still remain the main source through which insurance products
are sold. The concept is very well established in the country like India but still the
increasing use of other sources is imperative. At present the distribution channels that are
available in the market are listed below. Direct selling Corporate agents Group
selling Brokers and cooperative societies Bancassurance.

4. Customers have tremendous choice from a large variety of products from pure term
(risk) insurance to unitlinked investment products. Customers are offered unbundled
products with a variety of benefits as riders from which they can choose. More customers
are buying products and services based on their true needs and not just traditional money
back policies, which is not considered very appropriate for long-term protection and
savings. There is lots of saving and investment plans in the market.

5. Internet and technology has helped a lot to insurer. Now policy procuring through
online is economical than buying the same plan from agent. The major problem is not

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getting the support from the agent for that policy, if there is a claim or maturity. The
person has to keep direct contact with the company.

6. From 2010, the no of advisors have decreased in the industry. The no of agents
declined by 29% from March 2010 to March 2013. Also it is expected that more agents
will leave the industry. Under this situation, Claim management will be tougher for the
companies. As people buy insurance because of the face value of agents, assistance of
them is highly essential for good business.

7. From the year 2013, it is very clear that traditional plans have gained more weightage
over ULIP. As traditional plans are long term products, insurer need to focus more on
this. Customer retention and servicing is the key to remain in business. Even if in new
pension plan, the capital protection features demands more policy servicing. Here
investment and servicing are important for the companies. Above all, Policy
administration is the most difficulty area to provide customer servicing.

8. Customer satisfaction on service levels of life insurers has improved on several counts,
positively impacting insurers’ customer loyalty scores, a study by conducted by market
research firm IMRB International has found.  A slew of customer-friendly guidelines
issued by the Insurance Regulatory and Development Authority of India ( IRDAI) over
the years has resulted in better turnaround time ( TAT) perception, among other things.

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.
INSURANCE GROWTH DRIVERS IN INDIA.

The demand for insurance products is likely to increase due to the exponential growth of
household savings, purchasing power, the middle class and the country’s working
population. Listed below, are the various underlying growth drivers for India’s insurance
industry:

• Growing of the financial industry as a whole

• Growth of life and non-life industry

• Promoting innovation and removing inefficiency

• Competition and orderly growth

• Growth of specific insurance segments such as life insurance The seven over-arching
trends most relevant to insurers seeking to understand the world of the 2021s are:

Fig no: 3.4

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TYPES OF BANKING SECTORS

In banking sector banks are classified into 7 types. In these each banks has their own
specialisation and can play different actions which are useful to everyday of our life for
monetary transactions .Those can be explained as follows:

Fig no:3.5

RESERVE BANK OF INDIA

Unscheduled scheduled

Commercial cooperative

Public Private foreign Regional

sector sector rural

SBI and Other Other public

associaters nationalized sector banks
banks

RESERVE BANK OF INDIA (RBI)

The country had no central bank prior to the establishment of the RBI. The RBI is the
supreme monetary and banking authority in the country and controls the banking system
in India. It is called the Reserve Bank’ as it keeps the reserves of all commercial banks.

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SCHEDULED & NON –SCHEDULED BANKS

A scheduled bank is a bank that is listed under the second schedule of the RBI Act, 1934.
In order to be included under this schedule of the RBI Act, banks have to fulfil certain
conditions such as having a paid up capital and reserves of at least 0.5 million and
satisfying the Reserve Bank that its affairs are not being conducted in a manner
prejudicial to the interests of its depositors.

COMMERCIAL BANKS

Commercial banks may be defined as, any banking organization that deals with the
deposits and loans of business organizations. Commercial banks issue bank checks and
drafts, as well as accept money on term deposits. Commercial banks also act as
moneylenders, by way of instalment loans and overdrafts. Commercial banks also allow
for a variety of deposit accounts, such as checking, savings, and time deposit.

SCHEDULED COMMERCIAL BANKS (SCBS)

Scheduled commercial banks (SCBs) account for a major proportion of the business of
the scheduled banks. SCBs in India are categorized into the five groups based on their
ownership and/or their nature of operations. State Bank of India and its six associates
(excluding State Bank of Saurashtra, which has been merged with the SBI with effect
from August 13, 2008) are recognised as a separate category of SCBs, because of the
distinct statutes (SBI Act, 1955 and SBI Subsidiary Banks Act, 1959) that govern them.

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Types of Scheduled Commercial Banks:

Public Sector Banks

These are banks where majority stake is held by the Government of India. Examples of
public sector banks are: SBI, Bank of India, Canara Bank, etc.

Private Sector Banks

These are banks majority of share capital of the bank is held by private individuals. These
banks are registered as companies with limited liability. Examples of private sector banks
are: ICICI Bank, Axis bank, HDFC, etc

Foreign Banks

These banks are registered and have their headquarters in a foreign country but operate
their branches in our country. Examples of foreign banks in India are: HSBC, Citibank,
Standard Chartered Bank, etc .

Regional Rural Banks

Regional Rural Banks were established under the provisions of an Ordinance

promulgated on the RRB Act, 1976 with an objective to ensure sufficient institutional
credit for agriculture and other rural sectors.

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Fig no:3.6

Types of commercial banks Major shareholders Major players

Public sector banks Government of india SBI, PNB, Canara Bank,

Bank of Baroda, Bank of
India, etc

Private sector banks Private individuals ICICI Bank, HDFC Bank,

Axis Bank, Kotak Mahindra
Bank, Yes Bank etc

Foreign banks Foreign entity Standard Chartered Bank,

Citi Bank, HSBC, Deutsche
Bank, BNP Paribas, etc.

Regional rural banks Central govt., Andhra Pradesh

GrameenaVikas Bank,
Concerned state govt. and
UttranchalGramin Bank,
sponsor bank in the ratio of
Prathama Bank, etc
50:15:35

Cooperative bank

A co-operative bank is a financial entity which belongs to its members, who are at the
same time the owners and the customers of their bank. Co-operative banks are often

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created by persons belonging to the same local or professional community or sharing a
common interest. Co-operative banks generally provide their members with a wide range
of banking and financial services (loans, deposits, banking accounts, etc).

 Cooperative banks are the primary financiers of agricultural activities, some

small-scale industries and selfemployed workers.
 Co-operative banks function on the basis of “no-profit no-loss”.

The co-operative banking structure in India is divided into following main 5 categories:

 Primary urban co-operative banks.

 Primary agriculture credit societies.
 District central co-operative banks.
 State co-operative banks
 Land development banks

ROLE OF BANKING SECTOR

Banks play a very important role in modern economic system. Now a day’s growth of
nation can be done through banking system.

The following are the some of roles played by banks:

 Banks motivate people to make savings.

 Banks mobilizes savings for the purpose of investment.

 For the formation of capital banks play a coordination function between savings
and investment.

 For the enlargement of production purpose banks provide credit facilities.

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  Banks provides financial infrastructure and funds for backward region which
made balanced regional.

 development in the country. Banks plays a crucial role for expanding size of
market.

REVIEW OF INSURANCE BUSINESS IN INDIA.

From above you must have observed that the insurance business has grown manifold
after the nationalization of Life Insurance in 1956 and General Insurance in 1972.But the
international comparison as per details given below will show that insurance penetration
and insurance density in India is at low level as compared to the developing/developed
countries.

Fig no:3.7

Insurance penetration Insurance Density

(Premium as GDP) (Premium per capita in $)

Countries Total Non-life Life Total Non-life Life

USA 8.55 4.32 4.23 2921.1 1474.4 1446.4

UK 13.35 3.05 10.30 3244.3 741.5 2502.8

JAPAN 11.17 2.30 8.87 3908.9 805.50 3103.4

RUSSIA 2.13 1.34 0.78 26.80 17 9.9

france 8.52 2.82 5.70 2080.9 688.60 1392.30

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germany 6.52 3.55 2.96 1675.70 923.50 762.2

INDIA 1.93 0.54 1.39 8.50 2.40 6.10

BRAZIL 2.01 1.66 0.35 68.60 56.70 11.8

MEXICO 1.68 0.86 0.82 84.60 43.30 41.30

KENYA 3.26 2.48 0.78 9.9 7.5 2.4

AUSTRALIA 9.82 3.39 6.43 2037.4 703.8 1333.6

The reasons for low penetration may be that the insurance sector was totally in the hands
of the public enterprises. It is observed that the public enterprises in any country can’t
perform all the economic and business effectively. Even in the socialist country, public
enterprises in all the fields can’t discharge their full responsibilities. It is also said that
complete governmentalization or nationalization will lead towards slavery.

Keeping in view these problems the Indian Govt. started the liberalization process in
1991. Though the liberalization, privatization and globalization (LPG) has taken place in
many sector but the insurance sector was liberalized, privatization and globalized in the
year 2000.

Liberalization:

means abolition of industrial licensing, removal of the limit on industrial investment & a
more welcoming approach to foreign investment.

Globalization:

means opening of the Indian economy for global cooperation in economic activities. This
would involve foreign direct investment in industry and foreign institutional investors

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investing in the securities market by way of mutual funds etc., removal of quantitative
restrictions on imports and reduction of import tariff.

Privatization:

means refers to allowing private sector to invest in government companies as well as

invest in areas earlier reserved for the public sector. It also implies greater participation
of private sector in areas exclusively reserved for public sector. So far, the IRDA has
issued licences to 20 Life Insurance companies and to 15 General Insurance companies
including exclusive health insurance company.

Policies And Measures To Develop Insurance Market:

i) The market regulation by prudential norms,

ii) The registration of players who have the necessary financial strength to
withstand the demands of a growing and nascent market,
iii) The necessity to have “fit and proper” person in-charge of businesses,
The implementation of a solvency regime that ensures continuous financial
stability, and above all,
iv) The presence of an adequate number of insurance companies to provide
competition and choice to customers all these steps lead to the establishment
of a regime committed to an overall development of the market in normal
times.

Feasible Measures for Improvement of Banking and Insurance Sector in India

 Triggering demand drivers is the primary and vital measure, for Banking Market
dynamics,

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  Technology and Household savings are the main triggering factors that need
special attention. Consumer behavior, demographics, appointment of agency by
insurance committee to create insurance awareness can be of great use for growth
of insurance industry in India.

 Insurance sector is spending more on distribution i.e. agent have to travel to

customer, convincen designed in such a way that products have to be bought and
not to be sold.

 insurance industry so collective efforts by Government with insurance players

need to be taken Variety of insurance product, lower premium, short-term
contract, confidence in agent will also to resolve growth issue.

Fig no:3.8
Premiums market share in first year life insurance FY20
(all datas are in percentage)

17.48

6.35 LIC
HDFC standard life
SBI life insurance
52.78 ICICI prudential life insurance
9.15 others

14.25

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4. DATA ANALYSIS AND INTERPRETATION

The financial services segment has witnessed many

trends in recent times and this chapter takes a
comprehensive look at some of these trends. The
technological changes in the financial services segment
have been impressive. Though banking services are the
major adopters of high-end technology, other financial
services like insurance are also leveraging on technology
for delighting customers and gaining a competitive edge.
Kiosks are used as a cost-effective tool for product
communication, customer management, and brand
building. Stored Value Cards (SVC), also called
electronic purses, eliminate the need to carry hard cash.

Digital security is a technological endeavor that enables

safe and secure digital transactions and has gained legal
acceptance. Digital certificates will soon gain
prominence with increasing focus on e-governance,
online trading, and online transactions. Business
intelligence is a widely implemented decision making
tool. It includes OLAP, data warehousing, and data
mining. Business intelligence systems help the marketer
to analyze information and take suitable decisions.
Enterprise-wide IT solutions, such as Core Banking
Solutions, have helped financial product marketers in
streamlining their internal operations and delivering
greater value to the customers.

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Banks can also opt for self-regulation, by voluntarily adopting a code of conduct that has
been laid down by the Banking Codes and Standards Board of India (BCSBI), Post-
liberalization, the insurance industry has seen a lot of changes. Insurance marketers have
introduced new products. Micro-insurance, film insurance, health insurance, and specific
insurance products for women, are some emerging avenues for insurance marketers.

 The pandemic can already be seen as a watershed in the evolution of banking,

thanks to a confluence of trends that are reshaping the industry.
 COVID-19 has caused banks to become more proactive, to question their long-
held assumptions, and to become more adaptive and innovative.
 Instead of looking backwards at their progress, they are more likely today to be
looking forward at the opportunities that lie ahead.
 We’ve identified the 10 trends we believe will be most influential in disrupting
banking in 2022 and enabling an exciting new future for banking.
 "I see an incredible future for banking. I see this as a discontinuity, a point in time
that we're going to recognize, looking back, as the moment when everything
changed fundamentally. It’s going to be a different world going forward."

— MICHAEL ABBOTT, Senior Managing Director – Global Banking

Lead.

 History is rich with watershed moments, most of which are only obvious in

hindsight. For banking, however, the pandemic is a demarcation point that is

apparent in real time.

 Banks in 2021 abandoned the reactive posture they had assumed in the wake of

the Great Recession. They became proactive and started to question many long-

held assumptions.

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  They discovered they could transform far more quickly and radically than they’d

supposed.

 They are also shifting the focus of their digital innovation from enhancement to

invention. The signs of this are all around us, as banks abandon yesterday’s

mindsets to reimagine banking from a blank slate.

 Michael Abbott, our head of global banking, has been closely studying the forces

that have made the pandemic a watershed. These are the 10 trends he sees poised

to shape the banking industry in 2022.

Banking sector in India has played a major and a crucial role in socio-economic progress
and this is evident since the independence. Banking sector is the heart and soul of an
economy for any country. It is the most vital pillar for
any financial sector and plays a major role in economic development of the country. Our
paper seeks to analyse and compare the banking sector in India pre and post Covid-19.
The paper also focuses on the impact of Covid-19 on the population.

In recent years, the Indian economic environment has seen a lot of changes because of
reforms and measures taken by the banks. The largest change is seen in the financial sector
where the banking sector is the largest player to notice this change. So, the banking sector
is strong enough to withstand any sort of pressure and competition. Thus, these trends in
banking have been very visible in the last few years.

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Fig no:4.1

Loan Growth in India averaged 10.58 percent from 2012 until 2022, reaching an all time
high of 18.70 percent in April of 2012 and a record low of 4.10 percent in March of 2017.

This page provides the latest reported value for - India Bank Loan Growth - plus
previous releases, historical high and low, short-term forecast and long-term prediction,
economic calendar, survey consensus and news. India Bank Loan Growth - data,
historical chart, forecasts and calendar of releases - was last updated on June of 2022.

india Bank Loan Growth

In India, bank loan growth refers to the year-over-year change of the overall commercial

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banks credit to the economy, including food credit, non-food credit and loans, cash
credit,and overdrafts.

Fig no:4.2
Actual previous highest lowest dates unit Frequency

12.10 11.90 18.70 4.10 2012- percent biweekly

2022

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44
foreign banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural
cooperative banks in addition to cooperative credit institutions. As of September 2021,
the total number of ATMs in India reached 213,145 out of which 47.5% are in rural and
semi-urban areas.

According to the RBI, bank credit stood at Rs. 116.8 lakh crore (US$ 1.56 trillion) on
31st December 2021.

As of February 2022, credit to non-food industries stood at Rs. 114.10 trillion (US$ 1.53
trillion).

In FY18-FY21, bank assets across sectors increased. Total assets across the banking
sector (including public and private sector banks) increased to US$ 2.48 trillion in FY21.

In FY21, total assets in the public and private banking sectors were US$ 1,602.65 billion
and US$ 878.56 billion, respectively.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. Total equity funding of microfinance sector
grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in 2018-19.

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As of February 21, 2022, the number of bank accounts—opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’—reached
44.63 crore and deposits in the Jan Dhan bank accounts totaled Rs. 1.58 trillion (US$
21.25 billion).

Rising income is expected to enhance the need for banking services in rural areas, and
therefore, drive the growth of the sector.

India is the world's largest market for Android-based mobile lending apps, accounting for
~82% of all online lenders worldwide. India currently has 887 active lending apps.

The digital payments revolution will trigger massive changes in the way credit is
disbursed in India. Debit cards have radically replaced credit cards as the preferred
payment mode in India after demonetisation. In January 2022, Unified Payments
Interface (UPI) recorded 4.62 billion transactions worth Rs. 8.32 trillion (US$ 111.8
billion).

Fig no:4.3

Banking industries report 2018-2021 (public sector,private sector,foreign bank).

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STATISTICS AND FACTS OF BANKING INDUSTRIES (last financial year).

In 2021, there were nearly 100 thousand scheduled banks in India, including around 98
thousand comparatively small rural and urban cooperative banks. The 22 private sector
banks had assets worth over 800 billion U.S. dollars, whereas twelve public sector banks
had assets worth over 1.5 trillion U.S. dollars.
Although the total value of gross non-performing assets (GNPA) decreased from 2019 to
2020, a high share in NPAs brought some Indian banks into trouble. NPAs are loans or
advances that cannot be paid back or are delayed. In March 2020, RBI ordered a
consortium of the State Bank of India, some private banks, and private trusts to take over
troubled Yes-Bank.

Many government offices and economic sectors in India face the challenge to provide
inclusive services and reach out to rural areas. The Pradhan Mantri Jan Dhan Yojana,
made many financial services more accessible and affordable.

Fig no:4.4

India credit to the non-financial sector. (% Percent of GDP)

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2001 2005 2009 2013 2017 2021

First line indicate : 20, second line indicate : 40, third line indicate: 60,fourth line indicate : 80

Banks are the main providers of credit within India's financial system, and account for
around half of India's financial assets (Graph 1). While Indian authorities have sought to
develop a domestic corporate bond market, this remains relatively small and is mostly
used by larger firms and financial institutions (Ganguly 2019).

Non-bank financial corporations (NBFCs) have grown in recent years as alternative

intermediaries of finance; however, a substantial share of funding for NBFCs is
ultimately provided by banks. Beyond financing private and state-owned firms, banks are
also a significant funding source for governments, through direct loans and buying bonds
issued by the central and state governments. More generally, India's capital account has
remained relatively closed, and so India remains more reliant on domestic financing
sources than comparable emerging market economies.

India's banking system is dominated by government-owned ‘public sector banks’ (PSBs),

which account for around 60 per cent of commercial banking system assets. Since the
mid-2010s, these banks have been beset by problems with non-performing loans (NPLs)
and low capital levels (Graph 2) (RBA 2019). Over the past two decades, private sector
banks have become more prominent and generally have healthier balance sheets with
lower NPL ratios, although some private banks have failed in recent years.

Foreign banks are in the strongest financial position but comprise only 7 per cent of
commercial banking system assets. Outside the commercial banking system, there are a

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number of smaller banks that serve the needs of narrower groups of borrowers, including
rural cooperative banks, small finance banks, local area banks and payment banks.

Fig no :4.5

Data Analytics in Insurance

The technological landscape changes, and so the industries do. In today a worldwide
variety of insurance exists. Still, it is challenging for clients to understand through which

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insurance company they should start their insurance because many questions came into
customers minds like:

 Whether this company is safe or not?

 Will this company give the best offer or not?
 What is the reputation of this company in the market?

Similarly, insurers can also not understand customer behavior, frauds, policy risk, and
claim surety, which is mandatory before giving policy to someone. It took years for
insurers to sell directly to their customers and issue policies online while competing on
price comparison websites. Many companies still have not achieved it.

Implementing Data analytics in the Insurance Industry.

The digital transformation of insurance companies has been going on for years. It has
increased speed, efficiency, and accuracy across every branch of insurance companies.
Advanced data and predictive analytics systems help the insurance industry to make data-
driven business decisions. AI in Insurance has empowered companies with high-level
data and information that is leveraged into improved insurance processes and new
opportunities.

Rather than just focusing on internal data sources like loss histories, auto insurance
started work on behavior-based analytics and credit score from credit bureaus into their
analysis. Thus this analysis becomes evidence and generates insights to know the people
who are paying their bills on time are safe drivers. It makes the traditional analytics
advance and more productive in which they check claim histories, demographic and
physical data.

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New sources of external (third-party) data, tools for underwriting risk, and behavior-
influencing data monitoring are the primary developments shaping up as game-changers.

Use Cases of Data Analytics in the Insurance Industry

 Both clients of the insurance company and the insurance company owner are
end-users of the solution.
 Clients will know which insurance company is best for them to start insurance
through the top 5 companies, the price from lowest to highest, and the number
of customers. It will help them to choose the best company according to their
requirements.

 Insurers can also detect fraud, Undertaking for impaired life customers, and
claim development.

Fig no:4.6

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The market share of private sector companies in the general and health insurance market
increased from 48.03% in FY20 to 49.31% in FY21.

Six standalone private sector health insurance companies registered a jump of 66.6% in
their gross premium at Rs 1,406.64 crore (US$ 191.84 million) in May 2021, as against
Rs. 844.13 crore (US$ 115.12 million) earlier.

In March 2021, health insurance companies in the non-life insurance sector increased by
41%, driven by rising demand for health insurance products amid COVID-19 surge.

In July 2021, non-life insurers’ premium, which include general, standalone and
specialised public-sector, recorded 19.46% YoY growth and reached Rs. 20,171.15 crore
(US$ 2.71 billion) against Rs. 16,885 crore (US$ 2.27 billion) in the same month last
year.

Fig no:4.7

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5. CONCLUSION AND SUGGESTIONS

It is in this overall scenario, the policy relating to the financial services, and in particular
banking, must be considered. It is interesting to note that WTO negotiations on financial
services have been cautious and the commitments of many larger economies in the
banking sector are rather particularly limited. In other words, in the context of issue of
national ownership of financial intermediaries, banks appear to have a unique place in
public policy.

There are several noteworthy features of ownership and control of banks in all major
economies - irrespective of whether they are developed or emerging. In almost all cases,
banks are either widely held or have substantial State ownership. Furthermore, there are
special conditions governing the extent of ownership, the nature of ownership and
control, and transfers of such ownership or control through statutory backing. These are
justified since the banks are admittedly special. And they remain special in terms of the

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particular characteristics of their balance sheets, which are necessary to perform those
functions - including the mismatch between their assets and liabilities which makes banks
peculiarly vulnerable to systemic risk in the traditional sense of that term.” He is even
more forthright in making it clear that treatment of banks cannot be on par with
nonbanks. “On the other hand, I am not persuaded that the special public interest in
banking activity extends to non-banking financial institutions, though different functional
public interests in many cases clearly do.”

Data clearly indicates that banks continue to play a pre-dominant role in financial
intermediation in developing countries. This is understandable for several reasons viz. the
savers’ eagerness for assured income; inadequate capacity to manage financial risks and
the fact that the banking institutions in some sense and in different degrees, enjoy deposit
insurance and either implicit or explicit guarantee of government. It is important to note
that banking crisis invariably results in heavy costs to the Government, whether they are
publicly owned, privately owned, domestically owned or foreign owned.

The fiscal costs of banking crises are ownership-neutral. An important question in this
context is whether the role of banks in financial integration in developed countries is
different from that in the emerging market economies. It is useful to assess the significant
differences in the structureof the banking industry in emerging vis-à-vis developed
markets. In most emerging markets, banks’assets comprise well over 80% of total
financial sector assets, whereas these figures are

Fig no:5.1

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significantly lower in developed economies. In most emerging market economies, the
five largest banks (usually domestic) account for over two-thirds of bank assets. These
figures are much lower in developed economies. Internationalization defined as the share
of foreign- owned banks as a percentage of total bank assets, tends to be much lower in
emerging economies. This pattern is, however, not uniform within world regions. Finally,
a significant feature of banking in developed versus emerging economies, especially in
recent years, has been the process of consolidation.

The most notable difference between the consolidation process in developed and
emerging markets is the overwhelming cross-border nature of mergers and acquisitions in
the latter. In particular, cross-border merger activity in continental Europe and also
between US and European institutions has been more of an exception rather than the rule.
In contrast, there has been a sharp increase in foreign ownership of some emerging
market banks due to process of privatization often associated with crises.

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Banks can also opt for self-regulation, by voluntarily adopting a code of conduct that has
been laid down by the Banking Codes and Standards Board of India (BCSBI), Post-
liberalization, the insurance industry has seen a lot of changes. Insurance marketers have
introduced new products. Micro-insurance, film insurance, health insurance, and specific
insurance products for women, are some emerging avenues for insurance marketer. This
industry is going to face more challenges due to change in economy and employment.
More no of players around the world have planned to enter into India looking to the
potential available here.

This industry is going to face more challenges due to change in economy and
employment. More no of players around the world have planned to enter into India
looking to the potential available here. Probably understanding the customer expectation
and attitude for this product is the important. There is time to re-engineer the business
model.

Fig no:5.2

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 .

Fig no:5.3

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The financial performance of banking sector always puts an impact on the
performance of the economy.

Hence, the stability of banking sector is vital for the growth of any economy. The growth
of banks mainly depends on its conventional business services like deposits and loans. In
order to grow and gain the faith of stakeholders, organizations should try to improve the
long-term financial performance and create wealth for the customers and shareholders.
Wealth creation is considered as imperative. is based on adding value. Adding value by
means of improved technology is the way that all fortunes are made.

The Indian banking system is different from other global peers because of the country’s
unique geographic, social, and economic characteristics. The Indian banking system has
managed to remain relatively unaffected from global economic conditions until now, it
will be difficult to project that the sector will be unscathed in the long run too, despite the
support of a robust financial system. The economic recovery in Europe and the US is
sluggish, which is a major concern for the rest of the world, including India.

Besides, the rise in borrowings by the Indian government might drain funds from the
private credit market. In a scenario where the cost of borrowing is high and government
support is limited due to tighter economic conditions, banks will have to be very effective
in operations in order to provide.high returns to shareholders. Currently, there are many
challenges before Indian Banks such as improving capital adequacy requirement,
managing non-performing assets, enhancing branch sales & services, improving
organization design, using innovative technology through new channels and working on
lean operations. Apart from this, frequent changes in policy rates to maintain economic
stability, various regulatory requirements, etc. are additional key concerns.

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Road Ahead

Enhanced spending on infrastructure, speedy implementation of projects and

continuation of reforms are expected to provide further impetus to growth. All these
factors suggest that India’s banking sector is also poised for robust growth as the rapidly
growing business would turn to banks for their credit needs. Also, the advancements in
technology have brought the mobile and internet banking services to the fore. The
banking sector is laying greater emphasis on providing improved services to their clients
and also upgrading their technology infrastructure, in order to enhance the customer’s
overall experience as well as give banks a competitive edge.

In this paper Banking and Insurance sector of India is critically analysed with its recent
trends, features, challenges and measure to face these challenges effectively. After study
it is found that our public sector Banks are still lagging behind in various ways like
overburdened service offering; cutting valuable time of doing business resulting in lower
profitability, increasing NPA’s. Insurance sector is also showing very slow growth
literally in points only and trust in Insurance products is still very negligible, it has to be
looked into somewhere.

Both sectors are experiencing technological advancement; it’s a good sign in terms of
cost cutting, speedy and making fast transaction, but the thing is that only 35%
population have access to internet and such facilities still resulting in rush at Banks and
Insurance offices for transactions and inquiries and such related activities. Paper reflects
that these two sectors are main drivers of Indian economy still their contribution in GDP
is very low. Ground level measures need to be followed as suggested in last part of this
paper to aid in vision 2020 of India.

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GROWTH STRATEGIES FOR INSURANCE COMPANY.

Strong Digital Capabilities

Consumer demand has been driving digital adoption for years, and the insurance industry
has become more innovative – and more competitive – as a result. As the gap between the
digital-haves and the have-nots continues to grow, the more technically inclined insurers
are beginning to outperform their non-technical counterparts.

According to the JD Power 2020 U.S. Auto Insurance Study, for the first time in the
study’s 21 year history, website functionality has surpassed direct agent-to-client
interaction as a contributing factor toward customer satisfaction., in addition to achieving
the highest possible ratings from both NerdWallet and AM Best.

Corporate Social Responsibility (CSR)

Not every transformation requires a digital upgrade. A recent Capgemini study reported

that 79% of consumers prefer brands that prioritize corporate social responsibility (CSR).
Other studies have linked CSR to increases in employee productivity, work quality,
and revenue. As the world continues to face multiple crises – the pandemic, economic
uncertainty, and increasingly severe weather events, just to name a few – opportunities
abound for companies willing to roll up their proverbial sleeves and participate in the
solution.

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Hyper-Personalization

After years of enjoying tailored experiences from corporate behemoths such as Amazon
and Netflix, consumers have come to expect that same level of personalization from all
their brand interactions. In an industry built on a one-size-fits-all economic concept,
insurers now face the challenge of pushing the business model beyond that of pure risk
mitigation.

Enter the new insurance ecosystem.USAA, the U.S. military community’s provider of
choice, recently topped Forrester’s 2020 CX Index, and regularly receives the highest
accolades from JD Power*, Consumer Reports, NerdWallet*, and AM Best, among
others. To say that USAA has expanded the scope of what it means to be an insurance
provider would be an understatement.

 Diversity & Inclusion (D & I)

Although the two terms are often used together, ‘diversity’ and ‘inclusion’ refer to two
distinct, yet interrelated concepts. In the context of employment, diversity refers to a
workforce made up of people with a variety of backgrounds and characteristics, which
may include multiple races, genders, ages, ethnicities, religions, sexual orientations,
abilities, and other personal, social, and cultural attributes. Inclusion involves an
environment in which all employees can feel comfortable and confident knowing that
each of their individual perspectives, lifestyles, experiences, beliefs, qualities, and talents
are equally valued, supported, and celebrated.

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Flexible Pricing Structures

According to the 2020 J.D. Power Auto Insurance Shopping Study, the importance of
price as a deciding factor among auto insurance customers has steadily climbed over the
past decade. As of April 2020 – one month after the pandemic began to take its toll on the
American economy – that rate-sensitivity jumped an additional 20% from the previous
month, and shopping for a new provider more than doubled in the same time-frame.
With more policyholders shopping around for better rates, direct-to-consumer insurance
has become increasingly popular

More strategies or suggestions for insurance industries are as :

Fig no:4.4

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1. INTRODUCTION

Banks plays an important role in the economic development of developing countries.

Economic development involves investment in various sectors of the economy. The
banks collect savings for investment in various projects. In normal banking the banks
perform agency services for their customers and helps economic development of the
country. The purchase and sales securities, shares, make payments, receive subscription
funds and collect utility bills for the Government department. There for banks save time
and energy of busy peoples. Bank arranges foreign exchange for the business transactions
with other countries.

Banking sector are not simply collecting funds but also serve as a guide to the customer
about the investment of their money. Current banking sector has come up with a lot of
initiatives that oriented to providing a better customer services with the help of new
technologies. Banking sector mirrors the larger economy its linkages to all sectors make
it proxy for what is happening in the economy as a whole. Indian banking sector today
has the same sense of excitement and opportunity that is evidence in the Indian Economy.
The going developments in the global markets offer so many opportunities to the banking
sector. In the competitive banking word improvement day by day in customer services is
the most useful tool for their better growth. Bank offers so many changes to access their
banking and other services.

Risk is inherent part and parcel of our lives. None of us know what is going to happen to
us in the future but what we do know is that accidents happen. This is the simple idea that
the insurance industry is founded on. The insurance industry in India has changed swiftly
in the turbulent economic environment throughout the world. Indian insurance companies
have become competitive in nature and are undoubtedly serving customers in manifold

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ways. One of the important contractual savings institutions is life insurance which
provides multi dimensional services having a significant impact on economic growth.
Insurance is one of the demanding financial products in India. Its basic motto is to protect
the family from any uncertainty in life.

MAIN BODY

Indian Life insurance sector is growing at a faster rate. This sun rising industry has given
a platform for economic growth and employment. The great extent of importance
realized after it has opened to the private players in the post liberalization period. With
many players in business, the insurance regulatory and development authority came
with innovative and constructive guidelines for both products and services.

There was exponential growth in the first decade of insurance industry liberalization the
back of innovative products and aggressive expansion of distribution, the life insurance
industry grew at jet speed. However, this frenzied growth also brought in its wake issues
related to product design, market conduct, complaints management and the necessity to
make course correction for the long term health of the industry.

These product guidelines are in line with the IRDA’s regulatory theme of customer
orientation and longterm nature of the life insurance business. The guidelines follow two
overarching themes of providing Guarantee and enhancing Transparency. The major
changes introduced include - Higher Death Benefit, Guaranteed Surrender Value and
mandatory Benefit Illustration for all life insurance products. These changes related to
death benefit and surrender value may marginally reduce the customers’.

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Fig no:1.1

This year, the Indian insurance industry is mostly expected to search for growth through
new service-based models, innovative products and better focus on prevention.

Digitalisation

In the months gone by, insurers have started to realise the fact that the traditional
approach of selling insurance products to the customers will no longer be near enough for
the insurers who wish to stay ahead of their competitors.

New Insurance Products

The awareness around need for protection has increased by many folds since the onset of
the pandemic. The need for insurance has become ubiquitous with maximum people
investing in insurance products as per their requirements. Interestingly, demand for
insurance products for a plethora of risks that were usually not covered by insurance
companies has started gaining traction.

Rise in Demand for Standardised Products

The year 2021 will be the year of Standard Insurance Products. In the year 2020, all
general and specialised health insurers on the directions of the IRDAI came up with

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standard health insurance product – Arogya Sanjeevani. Later, the regulatory guided all
life insurers to come up with a standard term life insurance plan – Saral Jeevan Bima
from January 1st 2021

Fig no:1.2

The specific objectives of the paper are:

 To study the key features of Indian Banking and Insurance sector.

 To study the present Banking and Insurance sector scenario.
 To suggest feasible measures for improvement of these two sectors .
 To study challenges faced by these sectors.
 To study recent trends in Indian Banking and Insurance sector.

Majority of the banks are successful in keeping with the confidence of the customers as
well as other stakeholders but not all the banks are able to live up to the expectation of
them. In order to grow and gain the faith of stakeholders, organizations should try to
improve the long-term financial performance and create wealth for the stakeholders. We
are currently in a phase of ‘Digital Darwinism’, an era where technology and society are

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evolving. The bang of digital forces like Social Media, Mobile, Analytics, Cloud and
Internet of Things (IOT) are creating flow of business information in a more direct and
cost efficient manner. India is not un-touched by this phase of ‘Digital Darwinism’.

Fig no:1.3

The new technology trends such as Cloud Computing, Artificial Intelligence and
Biometrics etc, are likely to bring about significant changes in the way payments would
be processed in the future. Already the Indian banking sector is making substantial
investment in forming digital infrastructure to offer various solutions like mobile
banking, e-wallets and virtual cards, etc. Payment Systems have paved the way for New
Banking Paradigms by bringing new financial technology.

……………………………………………………………………………………………..

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 ABSTRACT

Today, we are having a fairly well developed banking system with different classes of
banks public sector banks, foreign banks, private sector banks, both old and new
generation, regional rural banks and cooperative banks with the Reserve Bank of India as
the fountain Head of the system. In the banking field, there has been an unprecedented
growth and diversification of banking industry has been so stupendous that it has no
parallel in the annals of banking anywhere in the world.

In most emerging markets, banks’ assets comprise well over 80% of total financial sector
assets, whereas these figures are significantly lower in developed economies. In most
emerging market economies, the five largest banks (usually domestic) account for over
two-thirds of bank assets. These figures are much lower in developed economies.
Another difference in the banking industry in developed and emerging economies is the
degree of internationalization of banking operations.

There is no denying fact that the insurance industry is going through drastic changes.
Innovative plans, electronic insurance and minimal role of agents all have contributed
towards the modernization of insurance industry in India. Now, a policyholder choose the
insurance plan according to his or her requirements and purchasing capacity. Application
of ICT has made the process of buying insurance relatively easy and convenient.

Now, we can have the option of digitized insurance policies. There are various players in
insurance market competing for delivering satisfaction to the policyholders. This article
will throw ample light on the recent trends and developments in insurance industry in
India

.Keywords: Indian Banking Sector, Emerging Trends & Progress and Emerging
Economies ,electronic insurance,insurance policies,development in insurance.

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 ANNOTATED BIBLIOGRAPHY

Books/Journals:

 shodhganga.inflibnet.ac.in/bitstream/10603/60862/11/11_chapter%201.pdf

 Banking & Finance, Sector Analysis / February15,2020 / By Mahendra Singh

 Media Reports, Press releases, Reserve Bank of India, Press Information Bureau,

www.pmjdy.gov.inss

 B. Nagaraja (2019), “Performance of Insurance Industry in India: A Critical

Analysis,” International Journal of Multidisciplinary and Scientific Emerging

Research, Vol.4.

Websites:

 www.BankExamsToday.com

 https://www.bankexamstoday.com/2021/.../recent-developments-in-

indianfinancial.ht.

 https://www.worldwidejournals.com

https://www.ibef.org/industry/banking-presentation

https://www.camoinassociates.com 

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