PROJECT REPORT

ON

" INDIAN BANKING INDUSTRY: CHALLENGES "

Submitted in partial fulfillment of the requirements for the

Two-Year Full-Time Master of Business Administration

(Affiliated to A.P.J. Abdul Kalam Technical University,Lucknow)

(SESSION -2021- 2022)

By: Under the Guidance of

Gaurav Prof. Girish kumar sir
Roll No. -
SEMESTER:- 2nd

DATE OF SUBMISSION:- /06/2022

1
 CERTIFICATE OF ORIGINALITY

I hereby declare that this Project Report is my own work and that, to the best of
my knowledge and belief, it reproduces no material previously published or written
that has been accepted for the award of any other degree or diploma, except where
due acknowledgement has been made in the text.

Gaurav
Roll No. 2103300700002
Date:
2
 DECLRATION

This is to certify that Gaurav MBA (2021-22 Batch) a student of Abdul Kalam
Technical University, Lucknow has undertaken the Project report (KMBN252)
on “INDIAN BANKING INDUSTRY: CHALLENGES”

The project has been carried out by the student in partial fulfillment of the
requirements for the award of MBA, under my guidance and supervision.

I am satisfied with the work of Gaurav.

DATE :- Gaurav
Roll No. 2103300700002

3
 ACKNOWLEDGEMENT

The satiation and euphoria that accompany the successful completion of the project
would be incomplete without the mention of people who made it possible.

I would also like to thank Mr. Girish kumar sir of INDIAN BANKING
INDUSTRY: CHALLENGES for his valuable contribution; his guidance was
certainly indispensable for my project work.

I appreciate my help with my college friend's INDIAN BANKING INDUSTRY:

CHALLENGES project who never hesitated during this project.

Gaurav
Roll No. 2103300700002

4
Abstract

The economic reforms initiated by the Government of India about two decades
ago have changed the landscape of several sectors of the Indian economy. The
Indian banking sector is no exception. This sector is going through major changes
as a consequence of economic reforms. The role of banking industry is very
important as one of the leading and mostly essential service. India is the largest
economy in the world having more than 120 crore population. Today in India the
service sector is contributing half of the Indian GDP and the banking is most
popular service sector in India. The significant role of banking industry is essential
to speed up the social economic development. Banks plays an important role in the
economic development of development countries. Economic development involves
investment in various sector of the economy. The economic reforms have also
generated new and powerful customers (huge Indian middle class) and new mix of
players (public sector units, private banks, and foreign banks). The emerging
competition has generated new expectations from the existing and the new
customers. There is an urgent need to introduce new products. Existing products
need to be delivered in an innovative and cost-effective way by taking full
advantage of emerging technologies. The biggest opportunity of the Indian banking
system today is the Indian consumer. Demographic shifts in terms of income levels
and cultural shifts in terms of lifestyle aspirations are changing the profile of the
Indian consumer. The Indian consumer now seeks to fulfill his lifestyle aspiration
at a younger age with an optimal combination of equity and debt to finance
consumption and asset creation. This is leading to a growing demand for
competitive, sophisticated retail banking services.

5
Keywords:
Risk management, global banking, e-banking, information technology, sustainable
competitive edge.

Introduction

India is one of the top 10 economies in the world, where the banking sector has
tremendous potential to grow. The last decade saw customers embracing ATM,
internet and mobile banking. India's banking sector is currently valued at Rs. 81
trillion (US$ 1.31 trillion). It has the potential to become the fifth largest banking
industry in the world by 2020 and the third largest by 2025, according to an
industry report. The face of Indian banking has changed over the years. Banks are
now reaching out to the masses with technology to facilitate greater ease of
communication, and transaction are carried out through the Internet and mobile
devices. 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 a system provided by the bank
with offers cash management services for customers, reporting the transactions of
their accounts and portfolios, throughout the day. The banking system in India
should not only be hassle free but is 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

6
credit. 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. Before the establishment of banks, the financial
activities were handled by money lenders and individuals. At that time the interest
rates were very high. 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.

A bank is a financial institution that accepts deposits from the general public and
creates credit. Whereas the business conducted or services offered by the bank
define banking, now this banking system has been drastically reached to digital
banking. Digital banking means of network has shown drastic innovation. Over the
past few years and has indeed affected almost every sphere of our lives. One of the
most recent effects has been the move towards a cashless economy in countries
like India. The developmental strategy towards achieving supremacy in digital
banking must consider core elements in their entirely to achieve desired goals .The

7
primary element is Innovation the ability of the bank to develop unique ideas to
transform itself.

Objectives
1.1 Statement of Problem The digital banking is indeed radically better than the
physical one since it allows instant access, extreme convenience, trail and tracking
options, lower costs and automatic record keeping. Even though ‘the recognized
problem here would be that if all these benefits are not evident to users, the digital
process is flawed.

1. To analyse the challenges faced by cloud banking in present days.

2. To provide suitable suggestions to overcome the challenges

1.3 Importance of study The digital revolution has changed many elements within
almost every industry especially the financial industry. The new technology wave
that has started throughout the entire finance industry has changed a lot of the
banking structure that were traditionally set up. Banking solutions have changed
drastically since the introduction of online banking options. Cyber security and
data protection have also improved drastically since the entire industry has shifted
to more digital banking options. Factors such as online ATM, online banking, net
banking, NEFT, IMPS, mobile banking 24 hour access have changed the outlook
for why there is a need for digital banking. The importance of emerging
technology of digital banking there are many innovations that have been
succeeding such as mobile wallets, investment management applications, card less
ATM withdrawal towards the emergence of digital banking.

8
1.4 The objective of this paper is to explain the changing banking scenario, to
analyze the impact of LPG (Liberalization, Privatization & Globalization), the
emerging trends in banking sector and to study the challenges and opportunities of
National & Commercial Banks. In addition to this, an attempt is made to
understand the significance of banks in India.

Review of literature
1. Kumar (2006) another path-breaking innovation in the banking sector in recent
times is the emergence of internet banking customer can access his account
anywhere even from the comfort of his computer in the house with the added
benefit of funds transfer facility. Internet banking is estimated to be even more cost
effective for banks as compares to ATMs. Internet banking also provides the
customers with value added services like payment of insurance premiums, payment
of utility bills, booking of railway tickets etc.

2. RBI (2001) with the popularity of PCs, easy access to internet & World Wide
Web banks increasingly use internet as a channel for receiving instructions and
delivering their products and services to their customers. This from of banking
generally referred to as internet banking, although the range of products and
services offered by banks very widely both in their content and sophistication.

3. Radakrishna et al., (2007) BNM defines internet banking as banking products &
services offered by banking institutions on the Internet through access devices,
including personal computers & other intelligent devices

4. Avasthi & Sharma (2000-01) [2] have analyzed in their study that advances in
technology are set to change the face of banking business. Technology has
9
transformed the delivery channels by banks in retail banking. It has also impacted
the markets of banks.
The study also explored the challenges that banking industry and its regulator face.

5. B. Janki (2002) [3] analyzed that how technology is affecting the employee's
productivity. There is no doubt in India; particularly public sector banks will need
to use technology to improve operating efficiency and customer services. The
focus on technology will increase like never before to add value to customer
services, develop new products, strengthen risk management. To sum up the
literature review indicates that worldwide the importance of e-banking is
emphasized and use of the technology lead to increase the productivity. The
emergence of internet banking has made easy access to the customers at large.

Banking scenario in India

The general banking scenario in India has become very dynamic now-a-days.
Before pre-liberalization era, the picture of Indian Banking was completely
different as the Government of India initiated measures to play an active role in the
economic life of the nations, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. This resulted into greater
involvement of the state in different segments of the economy including banking
and finance. The Reserve Bank of India was nationalized on January 1, 1949 under
the terms of the Reserve Bank of India (Transfer of Public Ownership) Act, 1948.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India." The

10
Banking Regulating Act also provide that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could
have common directors. RBI in turn includes only those banks in this schedule
which satisfy the criteria laid down vide Section 42 (60) of the Act. Some co-
operative banks are scheduled commercial banks although not all co-operative
banks are. Being a part of the second schedule confers some benefits to the banks
in terms of access to accommodation by RBI during the times of liquidity
constraints. At the same time, however, this status also subjects the bank to certain
conditions and obligation towards the reserve regulations of RBI. For the purpose
of assessment of performance of banks, the Reserve Bank of India categories them
as public sector banks, old private sector banks, new private sector banks and
foreign banks.

Recent trends in banking

The growing competition, growing expectations led to increase awareness amongst

banks on the role & importance of technology in banking. Banking today has
transformed into a technology intensive and customer friendly model with a focus
on convenience. Recent trends are as follows:
 E-cheques: E-cheques which replace the conventional paper cheque. In India
Negotiable Instruments Act has already been amended to include truncatedcheque
and E-chequeinstruments.
 Real time gross settlement (RTGS): RTGS introduced in India since March, 2004
in a system through which electronic instructions can be given by banks to transfer
funds from their account to the account of another bank.

11
 Electronic funds transfer (EFT): It is system whereby anyone who wants to make
payment to another person can approach his bank and make cash payment or give
instructions to transfer funds directly from his own account to the bank account of
the receiver
 Electronic clearing service (ECS): It is a retail payment system that can be used
to make bulk payment of a similar nature. It is meant for companies and
government department to make and receive large volumes of payment.
 Automatic teller machine (ATM): It enables the customers to withdraw their
money at any time without interacting a human teller.
 Point of sale terminal: It is a computer terminal that is linked online to the
computerized customer information files in a bank & magnetically encoded plastic
transaction card that identified the customer to the computer. During transaction
the customer's account debited and the retailers account is credited by the computer
for the amount of purchase.
 Tele banking: It facilitates the customer to do entire non-cash related banking on
telephone. Under this devise Automatic Voice Recorder is used for smaller queries
and transactions.

Challenges faced by Indian banking industry

Developing countries like India, still has a huge number of people who do not
have access to banking services due to scattered and fragmented locations. But if
we talk about those people who are availing banking services, their expectations
are raising as the level of services are increasing due to the emergence of
information Technology and competition. Since, foreign banks are playing in
Indian market, the number of services offered has increased and banks have laid
emphasis on meeting the customer expectations. Now, the existing situation has

12
created various challenges and opportunity for Indian Commercial Banks. In order
to encounter the general scenario of banking industry we need to understand the
challenges and opportunities lying with banking industry of India. As banks
develop their strategies for giving customers access to their accounts through
various advanced services like e-banking, mobile banking and net banking, they
should also regard this emerging platform as a potential catalyst for generating
operational efficiencies and as a vehicle for new revenue sources. India's banking
sector has made rapid strides in reforming and aligning itself to the new
competitive business environment. The major challenges faced by bank are:
 High transaction costs A major concern before the banking industry is the high
transaction cost of carrying non-performing assets in their books. The growth led
to strains in the operational efficiency of banks and the accumulation of
nonperforming assets (NPA's) in their loan portfolios.
 IT revolution The application of IT and E-banking is becoming the order of the
day with the banking system heading towards virtual banking.
 Timely technological up gradation Already electronic transfers, clearings,
settlements have reduced translation times. To face competition it is necessary for
banks to absorb the technology and upgrade their services.
 Intense competition The RBI and Government of India kept banking industry
open for the participants of private sector banks and foreign banks and these banks
have spearhead the hi-tech revolution.
 Privacy and safety Privacy of customer's information and safety of their savings
is one of the topmost priority of bank. This goes a long way in influencing
customer behavior in the choice of payment methods.
 Global banking The impact of globalization becomes challenges for the domestic
enterprises as they are bound to compete with global players. There are 36 foreign

13
banks operation in India which becomes a major challenge for Nationalized and
Private Sector Banks.
 Financial inclusion Most of the Indian citizens don't use banking system for their
financial requirements. It has become a necessity to create the awareness and
importance of banks amongst people.
 Risk management system Bank need to have in place a fair and differentiated risk
based pricing of products and services since capital comes at a cost. Banks put the
risk management architecture in place to meet the regulatory requirements without
using the risk inputs for taking business decisions. The risk is not properly priced
for various products. The most challenging part is the availability, integrity the
reliability of data.
 HR management This is an area where most of our banks, especially the PNBs,
are found lacking. In their eagerness to expand their core business they tend to
forget the relevance of human expertise which drives their business in a sustainable
manner. The complexities of modern banking and the dependence on IT makes it
all the more important why the banks should have requisite manpower with right
amount of knowledge and experience at appropriate places.
 Standardization and capacity build-up While any development in offering
electronic services is welcome, standalone systems not only work in silos but also
fragment the market to some extent. Hence, as the payments eco-system matures,
inter-operability becomes essential, for which standardization in processes and
procedures is a pre-requisite. This not only facilitates uniformity in transaction
handling but also enables uniform customer experiences.
 Partnerships with non-banks It is imperative that banks also see the potential for
synergetic growth by partnering with these non-banks and leveraging on their
strengths so as to reap efficiency gains for both the entities. We have seen

14
instances of such partnership, particularly with MNOs acting as BCs. Similar
development should occur in other areas too. A word of caution is, however,
essential - banks cannot abdicate their responsibilities towards customers, in
ensuring safe and secure services, particularly in scenarios where a large part of the
activities involved in payments are outsourced.
 Growth of banking The Indian Banking industry experienced sustained
productivity growth, which was driven mainly by technological progress. Foreign
banks appear to have acted as technological innovators when competition
increased, which added to the competitive pressure in the market.
 Employees retention Long time banking employees are becoming disenchanted
with the industry and are often resistant to perform up to new expectations. The
diminishing employee morale results in decreased revenue. Due to the intrinsically
close ties between staff and clients, losing those employees completely can mean
the loss of valuable customer relationships.
 Social and ethical aspects There are some banks, which proactively undertake the
responsibility to bear the social and ethical aspects of banking. This is a challenge
for commercial banks to consider these aspects in their working. Apart from profit
maximization, commercial banks are supported to support those organizations,
which have some social concerns.
 Rural market Banking in India is fairly nature in terms of supply, product range
and reach, even though reach in rural India still remains a challenges 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 relative
to other banks in comparable economies in its region. For example recently, ICICI
Bank Ltd. merged the Bank of Rajasthan Ltd. in order to increase its reach in rural

15
market and market share significantly. Recently, SBI has merged State Bank of
Indore in 2010.
 Enhancing corporate governance Banks are special organizations because their
managers have a fiduciary duty to depositors as well as shareholders and thus a
solution to the 'principal agent problem aimed at maximizing shareholder value is
inappropriate. Therefore, the good Corporate Government of banks requires
regulation to balance the interest of depositors and taxpayers with those of the
shareholders. Moreover, banks are important participants in the payment and
settlement system and as such corporate government is highly relevant for them.
 Emerging challenges for 2015-16
1. Deceleration in economic growth impacting expansion of banking sector
2. Maintaining asset quality in the face of growing non-performing assets
restructuring of advances.
3. Augmenting capital and maintaining prudential capital
4. Preserving and augment profitability in a stressed environment
5. Implementing financial inclusion & Direct Benefits Transfer 6. Increased
competition from both within the banking sector with various banks
becoming aggressive
7. Adopting and adapting to technological changes/innovation to meet
regulatory norms and tap alternative channels.
8. Improving quality of human resources for working efficiently under the
latest technological developments
9. Capital mobilization

16
Challenges faced by cloud banking
The rapid transformation in digital era important for banks to remain
transparent and convenience however under banking makes it, in order to tap
into the power of digitalization there are number of challenges that need to
be overcome.
1. Attaining app perfection
Developing applications related to a business becomes crucial in order to retain
customers, with banking and financial applications increasingly offering the
comfort and luxury of monitoring expenses at any time from any place, however
most of applications are often ridden with bugs and face severe performance
issues.
2. Technology upgrades
It is not only necessary to include or adopt technology but it is also important to
grow with up by upgrade and new innovative ideas That needs serious amount of
investment for banking and financial entities in digital capabilities and formulating
effective digital strategies is more a challenging factor.

3. Cyber crime
Most of the banking and financial applications are subject to cyber attacks the
most. Fraudsters have been known to be innovative in their actions to siphon
funds, either as large amount in a shot or minuscule amounts from thousands of
accounts. If not money directly, there is always the threat of data being
compromised.

17
4. Spearheading with innovations
Spearheading the marketplace by offering innovative services is not just desired
but also required in order to stay ahead of the curve and attract a wide customer
base.
5. Sustainability
Post the successful innovation and implementation. The next pressing challenge is
to tackle effectively is sustenance and maintaining consistency in providing
services is a challenging factor.
6. Improving Risk Management System
RBI had issued guidelines on asset liability management and Risk Management
Systems in Banks in 1999 and Guidance Notes on Credit Risk Management and
Market Risk Management in October 2002 and the Guidance note on Operational
Risk Management in 2005. Though Basel II focuses significantly on risks it
implementation cannot be seen as an end in itself. The current business
environment demands an integrated approach to risk management. It is no longer
sufficient to manage each Risk Independently. Banks in India are moving from the
individual segment system to an enterprise wide Risk Management System. This is
placing greater demands on the Risk Management skills in Banks and has brought
to the forefront, the need for capacity building, while the first priority would be
risk integrating across the entire Bank, the desirability of Risk aggregation across
the Group will also need attention. Banks would be required to allocate significant
resources towards this objective over the next few years.

18
7. Rural Coverage
Indian local banks specially state bank groups having a good coverage and many
branches in rural areas. But that is quite lacking technical enhancement. The
services available at cities are specifically not available to rural branches, which
are necessary if banks want to compete now a day.

8. Technological Problems
That is true that Indian banks were already started computerized workings and so
many other technological up gradation done but is this sufficient? In metro cities
Indian local banks are having good comparable technology but that cannot be
supported and comparable by the whole network of other cities and village
branches.
9. Corporate Governance
Banks not only accept and deploy large amount of uncollateralized public funds
in fiduciary capacity, but they also leverage such funds through credit creation.
Banks are also important for smooth functioning of the payment system. Profit
motive cannot be the sole criterion for business decisions. It is a significant
challenge to banks where the priorities and incentives might not be well balanced
by the operation of sound principles of Corporate Governance. If the internal
imbalances are not re-balanced immediately, the correction may evolve through
external forces and may be painful and costly to all stakeholders. The focus,
therefore, should be on enhancing and fortifying operation of the principles of
sound Corporate Governance.

19
10. Customer Services
There are concerns in regard to the Banking practices that tend to exclude vast
sections of population, in particular pensioners, self employed and those
employed in unorganized sector. Banks are expected to oblige to provide Banking
services to all segments of the population, on equitable basis. Further, the
consumers interests are at times not accorded full protection and their grievances
are not properly attended to by Banks. Banks are expected to encourage greater
degree of financial inclusion in the country setting up of a mechanism for ensuring
fair treatment of consumers; and effective redressed of customer grievances.
11. Branch Banking
Traditionally Banks have been looking to expansion of their Branch Network to
increase their Business. The new private sector banks as well as the foreign banks
have been able to achieve business expansion through other means. Banks are
examining the potential benefits that may accrue by tapping the agency
arrangement route and the outsourcing route. While proceeding in this direction
banks ought not to lose sight of the new risks that they might be assuming in
outsourcing. Hence they have to put in place appropriate strategies and systems
for managing these new risks.
12. Competition
With the ever increasing pace and extent of globalization of the Indian economy
and the systematic opening up of the Indian Banking System to global
competition, banks need to equip themselves to operate in the increasingly
competitive Environment. This will make it imperative for Banks to enhance their
systems and procedures to international standards and also simultaneously fortify
their financial positions.
20
13. Transparency and Disclosures
In order to bring about meaningful disclosure of the true financial position of
banks to enable the users of financial statements to study and have a meaningful
comparison of their positions, a series of measures were initiated by RBI. It
covered a No. of aspects such as capital adequacy, asset quality, profitability,
country risk exposure, risk exposures in derivatives, segment reporting and
related party disclosures etc. With a view to moving closer towards international
best practices and International Accounting Standards and the disclosure need
under pillar 3 of Basel II, RBI has proposed enhanced disclosures of certain
qualitative aspects. Banks are required to formulate a formal disclosure

policy that addresses the banks’ approach for determining what

disclosures it will make and the internal controls over the disclosure
process.
14. Known Your Customer Guidelines
The guidelines were revisited in the context of the recommendations made by the
financial action task force on Anti Money Laundering Standards and on Combating
Financing of Terrorism. Compliance with these standards both by the
banks/financial institutions and the country has become necessary for
international financial relationships. Compliance with this requirement is a
significant challenge to the entire banking industry to fortify itself against misuse
by anti social persons / entities and thus project a picture of solidarity and
financial integrity of the Indian Banking system to the international community.

21
To face different challenges the following areas need to be focused

 To make stringent norms pertaining to bad loans and restructured assets and their
resolution Norms to improve asset quality, recovery, liquidity and the balance
sheets of banks
 Consolidation and mergers and entry of new players to bring competition,
innovation and productivity. It would also bring economies of scale
 Continuous bank licensing
 Converting some urban co-op. banks into commercial banks could aid them to
operate in mainstream with lower risk.
 Separate licenses for niche areas like wealth management investment banking
 Reforms in corporate debt market, government debt market & money market
 Focus on asset-liability management for banks
 Increased usage of technology in banking as it will help in up gradation, design
more e- products; also sustain and scale business
 Focus on financial inclusion/deepening
 Steps to remove structural bottlenecks on credit delivery and free pricing of
financial assets
 Transparency, improvement in clearing and settlement practices
 Reforms aimed at creating liquidity and depth for efficient price discovery of
banking products
 Bank should reduce the non-productive efforts with the help of technological
innovations and improve the process efficiencies.

22
Suggestions
Increase the presence of the bank in multiple geographies in order to increase
market share is another tool to combat competitors. Therefore Indian nationalized
and private sector banks must spread their wings towards global markets as some
of them have already done it. As per the above discussed facts it can be said that
the biggest challenge for banking industry is to serve the mass and huge market of
India.
As per the above discussion, we can say that the biggest challenge for banking
industry is to serve the mass market of India. Companies have shifted their focus
from product to customer. The better we understand our customers, the more
successful we will be in meeting their needs. In order to mitigate above
mentioned challenges Indian banks must cut their cost of their services. Another
aspect to encounter the challenges is product differentiation. Apart from
traditional banking services, Indian banks must adopt some product innovation so
that they can compete in gamut of competition. Technology up gradation is an
inevitable aspect to face challenges. Expansion of branch size in order to increase
market share is another tool to combat competitors. Therefore, Indian
nationalized and private sector banks must spread their wings towards global
markets as some of them have already done it. Indian banks are trustworthy
brands in Indian market; therefore, these banks must utilize their brand equity as
it is an valuable asset for them.

23
Conclusion
Indian banks face the challenges of sustenance with the increased competition and
need to develop proactive strategies with focus on product innovation, off-balance
sheet activities to increase their income from non-core activity, efficiency in
service delivery process, effective risk management etc. and more importantly on
customer satisfaction. It is evident that post liberalization era has spread new colors
of growth in India, but simultaneously it has also posed some challenges. This
paper discusses the various challenges and opportunities. Banks are striving to
combat the competition. The competition from global banks and technological
innovation has compelled the banks to rethink their policies and strategies.
Different products provided by foreign banks to Indian customers have forced the
Indian banks to diversify and upgrade themselves so as to compete and survive in
the market.
Over the years, it has been observed that clouds of trepidation and drops of growth
are two important phenomena of market, which frequently changes in different sets
of conditions. The pre and post liberalization era has witnessed various
environmental changes which directly affects the aforesaid phenomena. It is
evident that post liberalization era has spread new colors of growth in India, but
simultaneously it has also posed some challenges. This article discusses the various
challenges and opportunities like rural market, transparency, customer
expectations, management of risks, growth in banking sector, human factor, global
banking, environmental concern, social, ethical issues, employee and customer
services. Banks are striving to combat the competition. The competition from
global banks and technological innovation has compelled the banks to rethink their
policies and strategies.

24