The future of Indian Banking represents a unique mixture of unlimited opportunities amidst insurmountable challenges. On the one hand we see the scenario represented by the rapid process of globalisation presently taking shape bringing the community of nations in the world together, transcending geographical boundaries, in the sphere of trade and commerce, and even employment opportunities of individuals. All these indicate newly emerging opportunities for Indian Banking. But on the darker side we see the accumulated morass, brought out by three decades of controlled and regimented management of the banks in the past. It has siphoned profitability of the Government owned banks, accumulated bloated NPA and threatens Capital Adequacy of the Banks and their continued stability. Nationalised banks are heavily over-staffed. The recruitment, training, placement and promotion policies of the banks leave much to be desired. In the nutshell the problem is how to shed the legacies of the past and adopt to the demands of the new age.

On the brighter side are the opportunities on account of -

1. The advent of economic reforms, the deregulation and opening of the Indian economy to the global market, brings opportunities over a vast and unlimited market to business and industry in our country, which directly brings added opportunities to the banks.

2. The advent of Reforms in the Financial & Banking Sectors (the first phase in the year 1992 to 1995) and the second phase in 1998

heralds a new welcome development to reshape and reorganise banking institutions to look forward to the future with competence and confidence. The complete freeing of Nationalised Banks (the major segment) from administered policies and Government regulation in matters of day to day functioning heralds a new era of self-governance and a scope for exercise of self initiative for these banks. There will be no more directed lending, pre-ordered interest rates, or investment guidelines as per dictates of the Government or RBI. Banks are to be managed by themselves, as independent corporate organizations, and not as extensions of government departments.

3. Acceptance of prudential norms with regards to Capital Adequacy, Income Recognition and Provisioning are welcome measures of self regulation intended to fine-tune growth and development of the banks. It introduces a new transparency, and the balance sheets of banks now convey both their strength and weakness. Capital Adequacy and provisioning norms are intended to provide stability to the Banks and protect them in times of crisis. These equally induce a measure of corporate accountability and responsibility for good management on the part of the banks

4. Large scale switching to hi-tech banking by Indian Scheduled Commercial Banks(SCBs) through the application of Information Technology and computerisation of banking operations, will revolutionalise customer service. The age-old method of 'pen and ink' systems are over. Banks now will have more employees available for business development and customer service freed from the needs of book-keeping and for casting or tallying balances, as it was earlier.

All these welcome changes towards competitive and constructive banking could not however, deliver quick benefits on account insurmountable carried over problems of the past three decades. Since the 70s the SCBs of India functioned totally as captive capsule units cut off from international banking and unable to participate in the structural transformations, the sweeping changes, and the new type of lending products emerging in the global banking Institutions. Our banks are over-staffed. The personnel lack training and knowledge resources required to compete with international players. The prevalence of corruption in public services of which PSBs are an integral part and the chaotic conditions in parts of the Indian Industry have resulted in the accumulation of non-productive assets in an unprecedented level. The future of Indian Banking is dependent on the success of its efforts as to how it shakes off these accumulated past legacies and carried forward ailments and how it regenerates itself to avail the new vistas of opportunities to be able to turn Indian Banking to International Standards.

PSBs in India can solve their problems only if they assert a spirit of self-initiative and self-reliance through developing their in-house expertise. They have to imbibe the banking philosophy inherent in de-regulation. They are free to choose their respective paths and set their independent goals and corporate mission. The first need is management upgradation. We have learnt prudential norms of asset classification and provisioning. More important now, we must learn prudential norms of asset creation, of credit assessment and credit delivery, of risk forecasting and de-risking strategies. The habit of looking to RBI and Government of India to step in and remove the barriers in the way of the Banks should be given a go-bye. NPA is a problem created by the Banks and they have to find the cause and the solution - how it was created and how the Banks are to overcome it. Powerful Institutions can be nurtured by strong and dynamic management and not by corrupt and weak bureaucrats. These issues are discussed with frankness and candour in these pages, under titles listed in the Table of Contents(see Menu Bar at the top), which provide you a direct access to any or all the topics of your choice.

Public sector ownership need not result in inefficiency and poor customer service. These are not due to the ills of ownership, but due to failure to accept the correct "Mission" and "Goals" of management. On the other hand unlike several private sector units, Public sector units have specific plus points. They do not evade taxes, and do not accumulate unassessed wealth or unaccounted money. They do not bribe controlling persons to get their way through. They do not indulge in predatory "take over" of weaker rival units. In fact a public unit never competes unethically with its rival-units.

It is in this context the subject of better management-efficiency and accountability are important. I have included discussion of such subjects like "Corporate Governance", Asset-Liability Management, Risk Management Survey etc. as part of the discussions in this project.