Impact of Gloablisationon Indian Banking Sector

Impact of Globalization on Indian Banking Sector

Chapter 1 – The Indian Banking Sector

History of Banking in India

Banking in India originated in the first decade of 18th century. The oldest

bank in existence in India is the State Bank of India being established as

"The Bank of Bengal" in Calcutta in June 1806. The first fully Indian

owned bank was the Allahabad Bank, which was established in 1865.

By the 1900s, the market expanded with the establishment of banks such

as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906,

in Mumbai - both of which were founded under private ownership. The

Reserve Bank of India formally took on the responsibility of regulating

the Indian banking sector from 1935. After India's independence in 1947,

the Reserve Bank was nationalized and given broader powers.

The banking in India was controlled and dominated by the presidency

banks, namely, the Bank of Bombay, the Bank of Bengal, and the Bank

of Madras - which later on merged to form the Imperial Bank of India,

which was renamed as the State Bank of India after the independence.

There was potential for many new banks as the economy was growing.

Lord Curzon had observed then in the context of Indian banking: "In

respect of banking it seems we are behind the times. We are like some old

fashioned sailing ship, divided by solid wooden bulkheads into separate

and cumbersome compartments."

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Nationalization

By the 1960s, the Indian banking industry has become an important tool

to facilitate the development of the Indian economy. At the same time, it

has emerged as a large employer, and a debate has ensued about the

possibility to nationalize the banking industry. Mrs. Indira Gandhi, the-

then Prime Minister of India expressed the intention of the GOI in the

annual conference of the All India Congress Meeting in a paper entitled

"Stray thoughts on Bank Nationalization." The paper was received with

positive enthusiasm.

Thereafter, her move was swift and sudden, and the GOI issued an

ordinance and nationalized the 14 largest commercial banks with effect

from the midnight of July 19, 1969. Jayaprakash Narayan, a national

leader of India, described the step as a "masterstroke of political

sagacity." Within two weeks of the issue of the ordinance, the Parliament

passed the Banking Companies (Acquisition and Transfer of

Undertaking) Bill, and it received the presidential approval on 9th

August, 1969.

A second dose of nationalization of 6 more commercial banks followed in

1980. The stated reason for the nationalization was to give the

government more control of credit delivery. With the second dose of

nationalization, the GOI controlled around 91% of the banking business

of India.

After this, until the 1990s, the nationalized banks grew at a pace of

around 4%, closer to the average growth rate of the Indian economy.

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Liberalization

In the early 1990s the then Narsimha Rao government embarked on a

policy of liberalization and gave licenses to a small number of private

banks, which came to be known as New Generation tech-savvy banks,

which included banks such as Global Trust Bank (the first of such new

generation banks to be set up)which later amalgamated with Oriental

Bank of Commerce, UTI Bank(now re-named as Axis Bank), ICICI Bank

and HDFC Bank. This move, along with the rapid growth in the economy

of India, kick started the banking sector in India, which has seen rapid

growth with strong contribution from all the three sectors of banks,

namely, government banks, private banks and foreign banks.

The new policy shook the Banking sector in India completely. Bankers,

till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%;

Go home at 4) of functioning. The new wave ushered in a modern

outlook and tech-savvy methods of working for traditional banks. All this

led to the retail boom in India

Functions of Banks today

Banks act as payment agents by conducting checking or current accounts

for customers, paying cheques drawn by customers on the bank, and

collecting cheques deposited to customers' current accounts. Banks also

enable customer payments via other payment methods such as telegraphic

transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current account,

accepting term deposits and by issuing debt securities such as banknotes

and bonds. Banks lend money by making advances to customers on

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current account, by making installment loans, and by investing in

marketable debt securities and other forms of lending.

Banks provide almost all payment services, and a bank account is

considered indispensable by most businesses, individuals and

governments. Non-banks that provide payment services such as

remittance companies are not normally considered an adequate substitute

for having a bank account.

Banks borrow most funds borrowed from households and non-financial

businesses, and lend most funds lent to households and non-financial

businesses, but non-bank lenders provide a significant and in many cases

adequate substitute for bank loans, and money market funds, cash

management trusts and other non-bank financial institutions in many

cases provide an adequate substitute to banks for lending savings to.

The economic functions of banks include:

Issue of money -- Issue of money, in the form of banknotes and current

accounts subject to cheque or payment at the customer's order. These

claims on banks can act as money because they are negotiable and/or

repayable on demand, and hence valued at par and effectively

transferable by mere delivery in the case of banknotes, or by drawing a

cheque, delivering it to the payee to bank or cash.

Netting and settlement of payments -- banks act both as collection agent

and paying agents for customers, and participate in inter-bank clearing

and settlement systems to collect, present, be presented with, and pay

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payment instruments. This enables banks to economize on reserves held

for settlement of payments, since inward and outward payments offset

each other. It also enables payment flows between geographical areas to

offset, reducing the cost of settling payments between geographical areas.

Credit intermediation -- banks borrow and lend back-to-back on their

own account as middle men

Credit quality improvement -- banks lend money to ordinary commercial

and personal borrowers (ordinary credit quality), but are high quality

borrowers. The improvement comes from diversification of the bank's

assets and the bank's own capital which provides a buffer to absorb losses

without defaulting on its own obligations. However, since banknotes and

deposits are generally unsecured, if the bank gets into difficulty and

pledges assets as security to try to get the funding it needs to continue to

operate, this puts the note holders and depositors in an economically

subordinated position.

Maturity transformation -- banks borrow more on demand debt and short

term debt, but provide more long term loans. Bank can do this because

they can aggregate issues (e.g. accepting deposits and issuing banknotes)

and redemptions (e.g. withdrawals and redemptions of banknotes),

maintain reserves of cash, invest in marketable securities that can be

readily converted to cash if needed, and raise replacement funding as

needed from various sources (e.g. wholesale cash markets and securities

markets) because they have a high and more well known credit quality

than most other borrowers.

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The Financial and Other services provided by banks

Merchant banking: Merchant Banking is an organization which

underwrites securities for the company, advises in various activities.

Banks provide services to businessmen to promote their business.

Leasing: Banks have started funding the fixed assets through leasing. A

written agreement is made in this respect.

Mutual Funds: Banks have floated new subsidiaries to undertake the

business of Mutual Funds. The main function of mutual fund is to

mobilize the saving of general public and invest them in stock market and

money market. Unit Trust of India is the first mutual fund started in India

in 1964. The nationalized banks have started their mutual funds through

subsidiaries.

Money Transfer: Banks are helping business and society for transfer of

money from place to place or person to person.

Housing Finance: There are variety of housing finance schemes stared

by banks. Such as purchase of new house, construction of new home,

home improvement, repairs, extension, land purchase, Bridge loans, and

balance transfer loans.

Portfolio Management: Portfolio management is a process of investment

in securities. The portfolio should be reviewed and adjusted from time to

time in tune with the market conditions.

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Structure of the Banking System

Central Bank (Reserve Bank)

Commercial Bank Co-operative Bank

Scheduled Bank Non-Scheduled Bank

Indian Bank Foreign Bank

Public Sector Regional Rural Local Area Private Sector

Bank Bank Bank Bank

SBI& Group Nationalized Bank Old Bank New Bank

Importance of Banks

We need banks in our day to day life. Banks cater to the needs of farmers,

businessman, traders, industrialists and common people in the society.

Common people save money, which they put into bank for safety,

security and getting some return out of it. Businessmen, traders and

industrialists open their account in the bank and carry out their

transactions for receipts of payment of money through cash or cheques.

They can also get loans from the bank for financing their business

activities. Farmers can borrow money from the bank for seeds, irrigation,

fertilizers, etc. They can also save and invest their surplus money in the

banks. Thus, banks are needed by every section of our society.

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Banks are an indispensable part in the modern developing society. They

act as an agent of their customers in performing the functions such as

collection of dividends, pensions, purchase and sale of securities and

payments of salary and other expenses. Banks are also needed by the

Government. Banks act as agent as well as banker of the Government.

They collect money from the Public, tax payers and businessmen on

behalf of the Government and payments are also made through the

Government. Only a bank can issue cheque books to the depositors

because they are authorized by the Banking Regulations Act.

A bank performs a multitude of functions and services which cannot be

reached into a single definition. A bank may mean different things for

different people. For some it is a store house of money, for others an

institution of funding money and to get finance and yet something else to

others.

Banking today means a lot more ….

In Current situation, banking in India is generally fairly mature in terms

of supply, product range and reach-even though reach in rural India still

remains a challenge 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. The Reserve Bank of India is an

autonomous body, with minimal pressure from the government.

With the growth in the Indian economy expected to be strong for quite

some time-especially in its services sector-the demand for banking

services, especially retail banking, mortgages and investment services are

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expected to be strong. One may also expect M & As, takeovers, and asset

sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to

increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%.

This is the first time an investor has been allowed to hold more than 5%

in a private sector bank since the RBI announced norms in 2005 that any

stake exceeding 5% in the private sector banks would need to be vetted

by them.

Currently, India has 88 scheduled commercial banks (SCBs) , 28

public sector banks (that is with the Government of India holding a

stake), 29 private banks (these do not have government stake; they may

be publicly listed and traded on stock exchanges) and 31 foreign banks.

They have a combined network of over 53,000 branches and 17,000

ATMs. According to a report by ICRA Limited, a rating agency, the

public sector banks hold over 75 percent of total assets of the banking

industry, with the private and foreign banks holding 18.2% and 6.5%

respectively.

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Chapter - 3 Globalization

Introduction to Globalization

Globalization in its literal sense is the process of making, transformation

of some things or phenomena into global ones. It can be described as a

process by which the people of the world are unified into a single society

and function together. This process is a combination of economic,

technological, socio-cultural and political forces. Globalization is often

used to refer to economic globalization, that is, integration of national

economies into the international economy through trade, foreign direct

investment, capital flows, migration, and the spread of technology.

The concept of Globalization infers that the globe is a single unit which

functions as one when it comes to decision-making. In other words,

Globalization implies the free movement of goods, services and capital

throughout the world. Globalization involves the opening up of national

economies to global markets.

Many Socialists define Globalization as a primarily economic

phenomenon, which involves increasing interaction and integration of

national economic systems. This leads in turn to growth in international

trade, investment and capital flows. Moreover, there is a rapid increase in

cross-border social, cultural and technological exchanges because of the

phenomenon of globalization.

The sociologist defines globalization as a decoupling of space and time.

With the advent of instantaneous communications, knowledge, trade and

culture can be shared around the world simultaneously. This will

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ultimately result in an increase in international trade, investment and

capital flows.

On the other hand, some critics define Globalization as ''the worldwide

drive towards a globalize economic system, dominated by supranational

corporate trade and banking institutions that are not accountable to the

democratic processes or national governments. Due to Globalization, all

important institutions like the nation, state, family, work, services, trade,

leisure, culture, knowledge etc. are changing. As a result of this, life

styles of people throughout the world are also changing, making the

world a single unit when it comes to decision making.

A Brief History of Globalization

The word "globalization" has been used by economists since the 1980s;

however, its concepts did not become popular until the latter half of the

1980s and 1990s.

Globalization is viewed as a centuries long process, tracking the

expansion of human population and the growth of civilization, that has

accelerated dramatically in the past 50 years. Early forms of globalization

existed during the Roman Empire, the Parthian empire, and the Han

Dynasty, when the silk road started in China, reached the boundaries of

the Parthian empire, and continued onwards towards Rome. Global

integration continued through the expansion of European trade in the 16th

and 17th centuries, when the Portuguese and Spanish Empires expanded

to the Americas. Globalization has had a tremendous impact on cultures,

particularly indigenous cultures, around the world.

Four distinct phases of globalization can be discerned in modern history:-

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The “first phase” began in sixteenth century with the passing of pre-

modern localism, improvements in maritime technology leading to great

age of maritime exploration and discovery.

The “second phase” from the late eighteenth century was marked by

the spread of industrial revolution and vast improvements in human

technology, productivity and demand, which lead to mass production.

The Industrial Revolution opened up a rapidly and widening income gap

between Europe and America on the other hand and the rest of the world

on other.

During the “third phase”, merchandise trade resumed its triumphant

march as the engine of hyper growth in East Asia from the 1970s.

International trade/GDP ratios recovered to their late 19 th century level by

the last decade of the 20th century. This globalization thrust was led by

trans -national corporations (TNCs) that endeavored disseminate

international trade and modern technology to every flag on earth.

Globalization arguably entered in the “frenetic fourth phase” from the

end of the twentieth century, in which developed and developing

countries are becoming more equal partners in the flow of cross border

trade and investment, as per capita income between the developed and

developing countries of the world rapidly converge, galvanized by the

awakening of the ancient sleeping giants, China and India.

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Globalization Understandings

"Globalization simply means freedom of movement for goods and

people, and it is hard to be violently hostile to that”. This term has

become a common word within the last few decades. This is a coming

event and some people are looking forward to the coming events. Others

fear and protest away from it. Some even see it as a defining point soon to

come to change our lives.

Pros and Cons of Globalization

The debates are strong and fierce for and against globalization. To take a

look closer at this, we view the pros and cons of globalization itself.

According to an April 2000 issue of Business Week these are the most

common Pros and Cons.

Pros

1. Viewing both the Productivity grows more quickly when

countries produce goods and services in which they have a

comparative advantage. Living standards can go up faster.

2. Global competition and cheap imports keep a lid on prices, so

inflation is less likely to derail economic growth.

3. An open economy spurs innovation with fresh ideas from

abroad.

4. Export jobs often pay more than other jobs.

5. Unfettered capital flows give the U.S. access to foreign

investment and keep interest rates low.

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The Pros for globalization show that prices will be kept at one set price

and that money will be quickly made by all. That help with foreign

countries could also speed up technology as well. Technology could help

the underdeveloped countries in the long run, and help everyone overall

economically.

Cons

1. Millions of domestic people lose their jobs due to imports or

production shifts abroad. Most find new jobs - that pay less.

2. Millions of others fear losing their jobs, especially at those

companies operating under competitive pressure.

3. Workers face pay-cut demands from employers, which often

threaten to export jobs.

4. Service and white-collar jobs are increasingly vulnerable to

operations moving offshore.

5. U.S. employees can lose their comparative advantage when

companies build advanced factories in low-wage countries,

making them as productive as those at home.

The Con list shows that the concerns are that smaller businesses will be

put out of business by larger ones. Also stating that only the white-collar

or richer people will be making a benefit in the changes.

It can be said that form the above observations made about globalization,

both sides have good points. Pro groups are saying there is money for all

and that it will help undeveloped countries grow. The anti group in

retaliation are saying that only the rich will gain from this globalize

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economy. Both continue to fight for what they see as right in their own

ways. But without more facts and effort from the anti-globalist this

economy is going to continue towards globalization. Only time will tell

what the real outcome really will be

Globalization in the era since World War II is largely the result of

planning by economists, business interests, and politicians who

recognized the costs associated with protectionism and declining

international economic integration. Their work led to the Bretton Woods

conference and the founding of several international institutions intended

to oversee the renewed processes of globalization, promoting growth and

managing adverse consequences. These institutions include the

International Bank for Reconstruction and Development (the World

Bank), and the International Monetary Fund.

Critics have observed that the term's contemporary usage comprises

several meanings. The term "globalization," like most terms of public

discourse, has two meanings: its literal meaning, and a technical sense

used for doctrinal purposes. In its literal sense, "globalization" means

international integration. In the technical sense defined by the powerful,

they are described as "anti-globalization," which means that they favor

globalization directed to the needs and concerns of people, not investors,

financial institutions and other sectors of power, with the interests of

people incidental.

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Measuring globalization Looking specifically at economic globalization, it can be measured in

different ways. These center around the four main economic flows that

characterize globalization:

1.Goods and services, e.g. exports plus imports as a proportion of

national income or per capita of population

2.Labor/people, e.g. net migration rates; inward or outward migration

flows, weighted by population

3.Capital, e.g. inward or outward direct investment as a proportion of

national income or per head of population

4.Technology, e.g. international research & development flows;

proportion of populations (and rates of change thereof) using particular

inventions (especially 'factor-neutral' technological advances such as the

telephone, motorcar, broadband).

Aspects Of Globalization

Globalization has various aspects which affect the world in several

different ways such as:

Industrial - emergence of worldwide production markets and broader

access to a range of foreign products for consumers and companies.

Particularly, the movement of material and goods between and within

transnational corporations, and access to goods by wealthier nations and

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individuals at the expense of poorer nations and individuals who supply

the labor.

Financial - emergence of worldwide financial markets and better access

to external financing for corporate, national and sub national borrowers.

Simultaneous though not necessarily purely globalize is the emergence of

under or un-regulated foreign exchange and speculative markets leading

to inflated wealth of investors and artificial inflation of commodities,

goods, and in some instances entire nations as with the Asian economic

boom-bust that was brought on externally by "free" trade.

Economic - realization of a global common market, based on the freedom

of exchange of goods and capital.

Informational - increase in information flows between geographically

remote locations. Arguably this is a technological change with the advent

of fiber optic communications, satellites, and increased availability of

telephony and Internet, to the globalist ideology.

Cultural -growth of cross-cultural contacts; advent of new categories of

consciousness and identities such as Globalism - which embodies cultural

diffusion, the desire to consume and enjoy foreign products and ideas,

adopt new technology and practices, and participate in a "world culture";

loss of languages

Social - increased circulation by people of all nations with fewer

restrictions. Provided that the people of those nations are wealthy enough

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to afford international travel, which the majority of the world's population

is not. An illusory 'benefit' recognized by the elite and wealthy, and

increasingly so as fuel and transport costs rise.

Advantages of Globalization

1. Goods and people are transported with more easiness and speed

2. free trade between countries increases

3. global mass media connects all the people in the world

4. as the cultural barriers reduce, the global village dream becomes

more realistic

5. the interdependence of the nation-states increases

6. as the liquidity of capital increases, developed countries can invest

in developing ones

7. the communication between the individuals and corporations in the

world increases

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Effects of globalization

1. enhancement in the information flow between geographically

remote locations

2. the global common market has a freedom of exchange of goods

and capital

3. there is a broad access to a range of goods for consumers and

companies

4. worldwide production markets emerge

5. free circulation of people of different nations leads to social

benefits

6. corporate, national and sub national borrowers have a better access

to external finance

7. worldwide financial markets emerge

8. multiculturalism spreads as there is individual access to cultural

diversity. This diversity decreases due to hybridization or

assimilation

9. international travel and tourism increases

10.worldwide sporting events like the Olympic Games and the FIFA

World Cup are held

11.local consumer products are exported to other countries

12.immigration between countries increases

13.cross-cultural contacts grow and cultural diffusion takes place

14.there is an increase in the desire to use foreign ideas and products,

adopt new practices and technologies and be a part of world culture

15.free trade zones are formed having less or no tariffs

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16. due to development of containerization for ocean shipping, the

transportation costs are reduced.

Chapter 4- Impact of Globalization on developing countries

Globalization is the new buzzword that has come to dominate the world

since the nineties of the last century with the end of the cold war and the

break-up of the former Soviet Union and the global trend towards the

rolling ball. The frontiers of the state with increased reliance on the

market economy and renewed faith in the private capital and resources, a

process of structural adjustment spurred by the studies and influences of

the World Bank and other International organizations have started in

many of the developing countries. Also Globalization has brought in new

opportunities to developing countries. Greater access to developed

country markets and technology transfer hold out promise improved

productivity and higher living standard. But globalization has also thrown

up new challenges like growing inequality across and within nations,

volatility in financial market and environmental deteriorations. Another

negative aspect of globalization is that a great majority of developing

countries remain removed from the process. Till the nineties the process

of globalization of the Indian economy was constrained by the barriers to

trade and investment liberalization of trade, investment and financial

flows initiated in the nineties has progressively lowered the barriers to

competition and hastened the pace of globalization

Globalization and Inflation

Ironically a chief culprit of today’s Inflation is the source that has kept

inflation low for much of the last two decades. It’s long being an article

of faith among economists that increasing integration of national

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economies contributed heavily to global decline in inflation.

Globalization allows domestic companies to hold down labor cost-via

outsourcing. Globalization forced the world global bankers to raise their

game to ensure that their countries can attract capital and investment. In

recent study the more globalize nations tend to pursue policies that

achieve faster economic growth, lower inflation, higher income, greater

economic freedom.

Globalization means people all over the globe have a greater ability to

share common experience of inflation. Globalization has brought about

structural changes in the world economy. This includes services

particularly banking and finance services is yet to capture the attention of

researchers and policy makers in many countries.

Globalization and Poverty:

Globalization in the form of increased integration though trade and

investment is an important reason why much progress has been made in

reducing poverty and global inequality over recent decades. But it is not

the only reason for this often unrecognized progress, good national

polices, sound institutions and domestic political stability also matter.

Despite this progress, poverty remains one of the most serious

international challenges we face up to 1.2 billion of the developing world

4.8 billion people still live in extreme poverty. But the proportion of the

world population living in poverty has been steadily declining and since

1980 the absolute number of poor people has stopped rising and appears

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to have fallen in recent years despite strong population growth in poor

countries.

It can be said that globalization has both positive and negative impacts on

a developing country like India. Pro groups are saying there is money

for all and that it will help undeveloped countries grow. The anti group in

retaliation are saying that only the rich will gain from this globalize

economy. Both continue to fight for what they see as right in their own

ways. But without more facts and effort from the anti-globalist this

economy is going to continue towards globalization. Only time will tell

what the real outcome really will be.

Globalization In India

A large number of global multinational brands such as Coca-Cola,

Google, Micro-soft and Mercedes-Benz have successfully operating in

India. Indian Brands which were operating locally in India earlier have

started competing internationally. From New Delhi to New York brands

have become global.

Pattern of consumption in India has also changed. Level of spending on

the private consumption has been growing significantly. Spending by

young consumers in India is regarded as the most powerful consumers.

In an era of globalize environment, the country has become a major

player in the socio-economic fields from merely a third world

country. BRIC and other reports have forecasted India to be the

third largest economy by 2040.

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Globalization in India has transformed the country’s system. Presently

India is regarded as an economy dominated country rather than politics

driven, as it was earlier. Political dominance has fallen significantly these

days. Adoption of Globalization in India and liberalization principles has

widened the horizon of country's Consumers worldwide. Consumers in

India have become more conscious. Market information in India has

become clear.

More over, development in education and awareness is largely marked in

the country in the era of Globalization in India

Globalization in India has been advantageous for companies that have

ventured in the Indian market. By simply increasing their base of

operations, expanding their workforce with minimal investments, and

providing services to a broad range of consumers, large companies

entering the Indian market have opened up many profitable opportunities.

Indian companies are rapidly gaining confidence and are themselves now

major players in globalization through international expansion. From

steel to Bollywood, from cars to IT, Indian companies are setting

themselves up as powerhouses of tomorrow’s global economy.

Impact on India:

India opened up the economy in the early nineties following a major

crisis that led by a foreign exchange crunch that dragged the economy

close to defaulting on loans.

The response was a slew of Domestic and external sector policy measures

partly prompted by the immediate needs and partly by the demand of the

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multilateral organizations. The new policy regime radically pushed

forward in favor of amore open and market oriented economy.

Major measures initiated as a part of the liberalization and globalization

strategy in the early nineties included scrapping of the industrial licensing

regime, reduction in the number of areas reserved for the public sector,

amendment of the monopolies and the restrictive trade practices act, start

of the privatization program, reduction in tariff rates and change over to

market determined exchange rates.

Over the years there has been a steady liberalization of the current

account transactions, more and more sectors opened up for foreign direct

investments and portfolio investments facilitating entry of foreign

investors in telecom, roads, ports, airports, insurance and other major

sectors.

Globalization and the future of Indian economy:

Globalization is an inevitable, irreversible process despite some vested

interests trying to thwart it and some other vested interests trying to take

better advantage of globalization than others. This is because the

increasing prosperity of people at large of each and every country in the

World is dependent on global trade, economic cooperation and global

integral of economic activities in all spheres- trade, commerce, financial

services, technology commercialization, conservation of exhaustible

resources, information and knowledge acquisition, protection of

environment, ecology, food and health security, enrichment of cultural

diversity, tourism, travel, and so on. This is being increasingly realized by

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more and more common citizens of almost every country. The vested

interests of military/ dynastic ideological exploitation and oppression are

getting exposed and will not be able to keep common people away from

globalization and its benefits for long.

Indian economy will also benefit and grow at a rapid rate, ensuring

radical improvements in standards of living and quality of life for more

than 1.1 billion Indians over the years. The increasing trend towards

regional trade agreements and bilateral trade agreements will make India

realize that India is already on the fast march on the path of globalization.

India is becoming more expert in sorting out issues at WTO. This may

create problems for politicians and their parties, they will not be able to

live the comfortable luxurious lives and enjoy the privileges of power to

control the lives of the masses, keeping them at their mercy for long.

Importers have strong financial interest in globalize economy. But the

greater danger posed by unrestricted globalization is that it may

exacerbate problem of nagging poverty and uneven development. It is

already evident that Indian Economy has become more dependent on

imports which have brought pressure on value of rupee, leading to high

Inflation.

For coping with risk that arise out of globalization Banks have adopted

reforms in calibrated manner. Due to globalization not only the GDP has

increased but also the direction of growth in the sectors has also been

changed. Earlier the maximum part of the GDP in the economy was

generated from the primary sector but now the service industry is

25


devoting the maximum part of the GDP. The services sector remains the

growth driver of the economy with a contribution of more than 57 per

cent of GDP. India is ranked 18th among the world’s leading exporters of

services with a share of 1.3 per cent in world exports. The service sector

is expected to benefit from the ongoing liberalization of the foreign

investment regime into the sector.

The Faces Of Globalization: A Dilemma For India

It's good for the economy; it creates employment, lots of it, and working

nights at India's back offices is pleasing and financially rewarding for a

huge number of young Indians.

However, while India's money-spinning industry of taking service jobs

from overseas is turning out to be a source of discomfort for U.S. and

European politicians, the subcontinent is fast realizing that its now-famed

success in so-called Business Process Outsourcing may have come at the

cost of a generation's mental well-being.

Owing to the 10 1/2 hour time difference between the Western

Hemisphere, particularly the United States, which sends more service

jobs abroad than anyone else, almost all Indian back office operations

have to work at shifts typically running from 5 p.m. to 3 a.m. local time

to coincide with the daytime office hours in the United States. And it's

this working at nights that requires adjusting the biological clock and

social practices to a different time, which is turning out to be a major

cause for health-related and social problems.

26


Still, even as the money and the act of donning an American life-style

through their working hours continues to be the initial draw for many

youngsters in the country's numerous back offices and call centers, a

worry that is looming large is: high social and health costs that the

country is paying for raking in billions of dollars, spoil India's back office

party sooner rather than later.

Cases of successful Mergers in India as a result of globalization

Globalization and mergers in India are among the most popular issues in

India and there has been plenty of debate surrounding these issues. Of

late, several sectors of the economy are heating up with numerous

mergers and global alliances. According to a recent review, this will

improve the economy of the country.

Mergers in India have led to a massive upsurge in the Indian economy.

Numerous companies in the auto sector, steel sector, cement sector,

pharmaceutical sector, petrochemical sector, and many more have

experienced mergers with the global companies. Among all the industrial

sectors in India, these are the few sectors which have witnessed the

maximum profit brought in by globalization and mergers with global

associations. The automotive sector is on the top list among the mergers

in India with Maruti Udyog Pvt. Ltd. and Tata Motors ruling the sector.

Tata Motors, one of the leading organizations in the auto sector has had

the maximum mergers and deals with trucks and agricultural machinery

besides cars and motors. The Fiat Company is looking forward to some

big-time trade through mergers in India as well and is already being

distributed by Tata Motors in India.

27


The mergers and acquisitions done by the global companies in India are

susceptible to continuous change in practicing the same. Globalization

and mergers in India is an influential perspective of any corporate

executive on every detail of mergers and acquisitions exercised around

the world. The transactions in the mergers in India include governing

mergers, joint ventures, acquisitions, takeovers, and other kinds of cross-

border transactions.

According to the expert knowledge of domestic markets, it is mandatory

to have International Mergers & Acquisitions Law for any company or

occupational group who is pursuing a global business strategy. The trends

and growth of mergers and acquisition dealings, changes in regulative

sector, and restructuring of the already modified associates led to a

marked increase in the globalization and mergers in India.

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Chapter 5 - Impact of Globalization on Indian Banking Sector

The term globalization connotes enhanced connectivity among people

across the national borders. The nature and pace of globalization depends

on the combined effect of technology and the public policy both at the

national and international levels. With the growing integration of

economies and the markets around the world, global banking has arrived

and is here to stay. Globalization will further fillip with the opening of

financial services under WTO. India, being one of the signatories of

financial services agreement of 1997, is poised to expand the reach of its

financial services, including banking, on a reciprocal basis to many

countries.

The process of globalization will increase the presence of international

players in the banking arena in India. Similarly, some of the Indian banks

will become global players. So, the banks will perforce spread their net

beyond borders in their quest for new markets, customers and profit.

Against this backdrop, banks in India must not only prepare themselves

to retain business back home but also to capture business in hitherto-

unexplored markets by competing with their global counterparts. Size is

not the only problem. Indian banks are considered to be lacking in

necessary products, skill sets on the part of their human resources and

risk-taking. The implementation of Basel II norms in right earnest is,

therefore, critical for Indian banks seeking an international presence. It is

felt that top international banks will enjoy lesser capital requirements on

29


the back of their superior risk management practices. This will enable

them to price their products aggressively when compared to the banks in

India.

Another key issue facing banks planning to go global is having a real

knowledge of the foreign market and making the best preparation

possible for an entry into it. Banks must be focused and disciplined. They

need a long-term plan, know what they want to achieve, consider the

strategic benefits, assess the risks and identify the competencies and

challenges. This global move may be achieved through joint venture or an

acquisition or any other route, but not before analyzing the market and

competitors. The challenges do not stop with successful market entry.

The banks must continuously evaluate and update their operations and

optimize the business processes to main competitive. The Reserve Bank

of India has, however, prepared sufficient ground on domestic turf so that

the aspiring Indian banks will not be left behind in their bid to become

truly global players. As pointed out by V Leeladhar, Deputy Governor of

The RBI, in a speech delivered to Kanara chamber of commerce and

Industry in March, Indian Banking Sector has already implemented

internationally followed prudential accounting norms for the

classification of assets, income recognition and loan-loss provisioning.

Currently, the banking sector in India complies with transparency and

disclosure norms comparable with the best international practices.

Overall, the Indian Banking sector is stronger today than it was a decade

ago. The focus on the microfinance and lending to small and medium

enterprise firms welcome change for the banking sector as well as the

economy and society as a whole. Finding opportunities at the bottom of

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the pyramid rather than regulator-mandated loan-publishing is likely to

help in better distribution of the economic gains as well as opportunities.

Managing the risk through the implementation of the Basel II is likely to

be an important step of Indian Banking Sector in the future. Banks and

financial institutions will continue to experiment with new technologies

and electronic, information based services to serve their customers better.

The potential is great, yet the return on investment will be realized only in

the long term. Proper alignment of technology strategies with business

goals will ensure commensurate value addition to banks.

Also, banks are rediscovering the need for more brick-and-mortar

branches as the most effective touch points for building relationships,

marketing and selling. Advancements in technology like data mining and

business intelligence will enable and empower branch personnel to

realize higher customer life cycle value. The information-intensive nature

of banking and financial service is unlikely to change. Banks will

continue to find new and innovative ways to put technology and business

risks associated with these investment proactively.

Globalization of Banking in India

Integration of economies leads to integration of financial markets

catalyzing the globalization process. The growing role of the financial

sector in allocation of resources has significant potential advantages for

the efficiency with which our economy functions. Consequently, the

adverse consequences of malfunction of the financial system are likely to

be more severe than they used to be in the past. Hence, all our efforts

today are focused at ensuring greater financial stability. Given the

31


significance of the Indian banking system, one cannot afford to underplay

the importance of a robust and resilient banking system.

The enhanced role of the banking sector in the Indian economy, the

increasing levels of deregulation along with the increasing levels of

competition have facilitated globalization of the India banking system

and placed numerous demands on banks. Operating in this demanding

environment has exposed banks to various challenges. The last decade

has witnessed major changes in the financial sector - new banks, new

financial institutions, new instruments, new windows, and new

opportunities - and, along with all this, new challenges. While

deregulation has opened up new vistas for banks to augment revenues, it

has entailed greater competition and consequently greater risks. Demand

for new products, particularly derivatives, has required banks to diversify

their product mix and also effect rapid changes in their processes and

operations in order to remain competitive in the globalize environment.

The benefits vis-à-vis Costs

To derive maximum advantage from technology investments, banks

should use technology as a strategic resource and align it well with their

business strategies and objectives. The strategic plan should clearly spell

out how much business value it can enhance and it should not be used as

mere publicity stunt. It is crucial that experts who have sufficient

exposure to both banking and technology domains formulate the strategic

planning. It is difficult to measure productivity in financial services

unlike in the rest of the service sector, since there is a constant

improvement in the quality of service in the quality of service in his

sector due to greater convenience, speed and lower risk. Moreover,

32


measuring the inputs used to produce outputs is not easy. Lack of

consistent data also hampers researchers from analyzing the cost and

benefits reliably. However, investments in the IT is justified by most

CEOs as the cost for retaining good customers, if not attracting new ones,

and for the better competitive advantage it provides.

Significance of Service Quality in Banking

With continuous growth of competition in market place, understanding

the customer has become more and more important. Research show that

high quality contributes significantly to Profitability. The result of the

present study shows that the Internet is a convenience tool available

whenever and wherever customers need it. It is also found that the

Internet has improved the factors in service quality like responsiveness,

communication and access. It is concluded that the Internet has an

important and positive effect on customer perceived banking services and

the service quality has been improved since the Internet has been used in

banking sector. Furthermore, the study offers suggestions to banking

managers to allocate their resources on the dimensions i.e., reliability,

responsiveness, security, communication and access to improve service

quality according to its relative importance since the Internet has been

used.

Now a days incredible growth of technology-intensive- new delivery

channels has liberalized the customers from the constraints of time and

space. Thanks to the high-level of service quality and standard, ATMs

have transformed the sway the customers carry out their banking

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transactions. Quality initiatives like Six Sigma can go a long way in

controlling this variance to ensure uniform customer experience.

Infusion of Technology made a Difference

Unlike the global banks, Indian banks have hooked on to the

computerization drive rather late, i.e., by the 1980s and 1990s. They

began with PC-based system, moved on to total branch automation and

later to networking and implementation of centralized/Core Banking

Solution (CBS).Banks tend to use information technology more

intensively and practice niche banking. Efficiency ladder has been driven

almost exclusively by the new private banks – ICICI, UTI, HDFC, etc.

Some new technologies introduced are:

Core banking solutions(CBS)

The concept of CBS, which allows a customer to fulfill a wide range of

banking operations online, has come alive during past four years. The

number of branches providing CBS has grown rapidly to 44 percent

since last years. The combination of a centralized database and browser

client is a powerful enabler of business process changes, as the processes

can be centralized, decentralized, split across locations or completely

outsourced at short notice to improve efficiency, enhance quality or

reduce risk. Core Banking Platform's open architecture ensures easy

interface to third party systems. The product can be interfaced with

various delivery channels like ATM, Internet Banking and Phone-

banking. It has a common set of service components that provide a

uniform customer experience across all channels. It has a user-friendly,

34


browser-based interface and operates in a truly 24 x 7 x 365 basis with

uninterrupted transaction execution.

Instant Fund Transfer: RTGS and NEFT

National Electronic Fund Transfer(NEFT) enables us to transfer funds

electronically from our bank account to an account in an other bank.

Typically it takes a day for an account to be debited and other to be

credited. There are no lower or upper limits for NEFT and generally

banks do not charge their customers who avail this facility.

Real Time Gross Settlement is where money is actually transferred

instantly to beneficiary account. If the amount is not transferred to the

beneficiary account within two hours for some reason the money is

credited back to your account.

High tech banking

ATMs: With growing technological innovations, banks have significantly

expanded their ATM network over the past three years. According to RBI

data as of end June2008, the number of ATMs in the country had climbed

to 36314 compare to 27088 at end March 2007 respectively.

Loan Disbursement: Technology has facilitated the growth in loan

disbursement also, making the whole process simpler and faster. The

sector has delivered a growth of 30% a year over last 4-5 years.

The Impact on Customers

35


The shift from branch counter to e-channels has indeed enhanced

customer service and convenience. The dream of anytime, anywhere

banking is a reality now. With facilities like mobile alerts, customers can

get real-time information about transactions in their accounts. The

warmth and human touch is missing because of the mechanical media,

leaving many a customer to contemplate the benefits of talking to the

good old banker. The silver lining for customers is that they can shift to

competitor’s banks easily if they are not satisfied with the services from

the present bank.

Innovation and Branding the Product

Experts opine that innovation is the key to the sustained growth of the

banking industry in future. However, innovation cannot be limited to

products and brands. Successful financial service players are required to

embed innovation in every aspect of their functioning, ranging from

products and processes to even people, system and business partners.

However, product innovation is important and such innovative products

need to be tailor-made for different customer segments; for example

specific to age groups, regions and so on. However, a bank should

develop a clear vision on the various parameters of innovations.

Banking ‘Then’ and ‘Now’

Indian villages were deprived of various financial products like MF,

insurance and equity trading, which are now accessible through proxy

banking in form of ATMs and kiosks. This is possible because banking

36


transactions are stored in a centrally located server with which all other

branches are connected.

Chapter 6- Implication of Globalization

Globalization has had an impact on different cultures around the world.

The seeds of globalization have been sowed with the introductions of

financial sector reforms. These include the following:

1) Deregulation of interest rates,

2) Capital Adequacy norms,

3) Internationally accepted accounting norms,

4) Asset classification,

5) Entry of Private Banks,

6) Reduction of Government stake in banks.

With reforms and the rapid globalization the very character of banks

underwent a fundamental change. Enhancing the profit and profitability

has become one of the major concerns for the banks. The prime driver

behind the reduction of cost is the increase of operational efficiency of

the banks. With the advent of Internet banking, the path for tremendous

cost saving was paved.

Commercial bank through out the world has been undergoing a major

transformation. Traditional banks have long been exposed to strong

external pressures brought about the influence of worldwide globalization

37


and unceasing technological development. Banks have been rapidly

expanding the menu of financial services they offer to their customers.

This proliferation of services has accelerated over the years under the

pressure of increasing competition from other financial firms. It has also

increased bank costs and posed a greater risk of bank failure. The new

services have had a positive effect on the industry through a new source

of bank revenue (interest income).

Interest Rates; likely Scenario

Interest rates are currently on the rise mainly on account of high oil and

commodity prices coupled with high inflation. Also, problems due to

erratic monsoon and its corresponding effect on agriculture production,

along with higher-than-anticipated money supply growth, are putting an

upward bias to the yield curve across maturities. The impact of this rising

interest rates on the banks will lead to reprising of the portfolio of the

banks on both asset and liability sides. The banks’ net interest margin

may be affected as liabilities in general get reprised faster than its assets.

As a whole, banks must develop a short, medium and long term views on

interest rates in their corporate planning exercise, wherein adverse impact

of a rising interest rate scenario can be taken care of through advance

planning. Such measures vary from bank to bank depending on the

composition of the portfolio.

Opportunity for Private Sector

This is the most visible change in Indian financial system. With the

emergence of new private sector banks and the entry of foreign banks, the

Indian banking is quickly getting drawn into globalize financial system.

38


Emphasis on Professionalism

The spirit of competition and the emphasis on profitability are also

driving PSBs towards greater profit-orientation from the socialistic

approach that was followed earlier. In general, it seems that the

emergence of new private banks and the increased participation of foreign

banks have increased professionalism in the banking sector as a whole.

One of the major forces of globalization in India has been in the growth

of outsourced IT and business process outsourcing (BPO) services. The

last few years have seen an increase in the number of skilled

professionals in India employed by both local and foreign companies to

service customers in the US and Europe in particular. Taking advantage

of India’s lower cost but educated and English-speaking work force, and

utilizing global communications technologies such as voice-over IP

(VOIP), email and the internet, international enterprises have been able to

lower their cost base by establishing outsourced knowledge-worker

operations in India.

Healthy Competition would Increase

Competition has clearly increased with the Herfindahi Index for advances

and assets dropping by over 28% and 20% respectively during 1991-92

and 2000-01. Over the period, The State Bank of India, the largest Indian

Bank, witnessed a decline in asset market share from 28% to 24% while

its loan market share dropped from 27% to 22%. The deposit share, on

the other hand, stayed pretty much the same at 23%. The asset, loan and

deposit shares of the top 10 banks all fell from close to 70% to below

39


60%. Nevertheless, the PSBs still enjoy a preeminent position in the

Indian banking sector today, accounting for over 80% of deposits and

credit. There is, however, a noticeable trend of private banks gradually

eroding the market share of the public sector.

Software Packages for Banking Applications in India had their

beginnings in the mid 80''s. This move was spurred on by RBI and the C

Rangarajan Committee Report which decided to computerize the Indian

Banking branches in a limited manner. This move was aimed at

promoting competition and allows an easy assessment of relative vendor

capabilities. Gradually, even those who opposed computerization in

government and banks changed their perspective and within a few years

our country became a superpower in Information technology. The early

90s saw a fall in hardware prices and the advent of cheap and inexpensive

but high-powered PCs and servers. Banks went in for what was called

Total Branch Automation (TBA) Packages. We are now at the point when

we have accepted the use of computers in every sphere of our activity

today.

Opportunities In Today’s Scenario

The entire banking sector has undergone a restructuring during recent

years as a result of Globalization. The I-T revolution has made it possible

to provide ease and flexibility in operations to customers thus making life

simpler and easier. Rapid strides in information technology have, in fact,

redefined the role and structure of banking in India. Further, due to

exposure to global trends after Information explosion led by Internet,

customers - both Individuals and Corporate - are now demanding better

services with more products from their banks. The financial market has

40


turned into a buyer's market. Banks are also coping and adapting with

time and are trying to become one-stop financial supermarkets. The

market focus is shifting from mass banking products to class banking

with the introduction of value added and customized products.

Public Sector Banks like SBI have also started focusing on this area. SBI

plans to open 100 new branches called Personal Banking Branches (PBB)

this year.

Customized banking products, such as Investment Advisory Services;

photo-credit cards; cash Management services; Investment products and

Tax Advisory services have already been introduced by a few foreign and

private sector banks. A few banks have gone in to market mutual fund

schemes.

The bank of the future has to be essentially a marketing organization that

also sells banking products. New distribution channels are being used;

more & more banks are introducing services like disbursement and

servicing of consumer loans, Credit card business. Direct Selling Agents

(DSAs) of various Banks go out and sell their products. They make house

calls to get the application form filled in properly and also take your

passport-sized photo. Home banking has already become common. Now,

you can order a draft or cash over the phone or internet and have it

delivered home. “ICICI was the first among the new private banks to

launch its net banking service, called Infinity”. It allows the user to access

account information over a secure line, request cheque books and stop

payment, and even transfer funds between ICICI Bank accounts. Citibank

has been offering net banking to customers.

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Chapter 7- Challenges to Banking due to Globalization

Globalization “a Challenge as well as an Opportunity”

The benefits of globalization have been well documented and are being

increasingly recognized. Globalization of domestic banks has also been

facilitated by tremendous advancement in information and

communications technology. Globalization has thrown up lot of

opportunities but accompanied by concomitant risks. There is a growing

realization that the ability of countries to conduct business across national

borders and the ability to cope with the possible downside risks would

depend, inter-alia, on the soundness of the financial system and the

strength of the individual participants. Adoption of appropriate

prudential, regulatory, supervisory, and technological framework on par

with international best practices enables strengthening of the domestic

banking system, which would help in fortifying it against the risks that

might arise out of globalization.

In India, we had strengthened the banking sector to face the pressures that

may arise out of Opening up of the frontiers for globalization by adopting

the banking sector reforms in a has to necessarily follow a carefully laid

out policy. As evidenced in our country, we took to reforms in early

nineties, strengthened the banking system, opened up in calibrated

manner, which followed the twin governing principles of allowed the

competition to sink in and tone up the efficiency and service quality.

42


The entire reform process the content, pace and sequencing, was

undertaken in such a manner that change was achieved in a non-

disruptive progress and consultative process manner and the result is

indeed very evident. The market participants and the regulator act in

tandem to bring about resilience in the financial system, shoring up the

confidence levels which are imperative for tapping the fruits of

globalization.

Global challenges in banking:

Recently a few broad challenges faced by the Indian banks in the

following areas viz. enhancement of customer service; application of

technology; improvement of risk management systems; implementation

of new accounting standards; enhancement of transparency & disclosures;

and compliance with KYC aspects. If we were to identify a few global

challenges which banks face today, I am sure we would cover some

common ground. Hence it can be said that, The global challenges which

banks face are not confined only to the global banks. These aspects are

also highly relevant for banks which are part of a globalize banking

system. Further, overcoming these challenges by the other banks is

expected to not only stand them in good stead during difficult times but

also augurs well for the banking system to which they belong and will

also equip them to launch themselves as a global bank.

The Indian banking sector is currently redefined as it faces myriad

challenges and opportunities, especially after 2009, when they will be

fully exposed to competition from here global counterparts. Banks are

43


bracing themselves to face the competition through the adoption of novel

technology and by strengthening their capital base. They are minimizing

their Non Performing Asset (NPAs), bringing down operating cost,

enhancing corporate governance and alignments, undertaking

organizational restructuring and sharpening their customer-centric

initiatives. Consolidation through the merger and acquisition route to

effectively compete with large global banks may not be far off, when

viewed against such preparedness and positive signs from regulators.

Technology is clear a prerequisite for growth and scale.

Overcoming Challenge

Development in technology also offer potential opportunities for banks to

develop and improve their retail distribution channels. Coming to

important trends in India, ICICI and several other DFIs have made

inroads into universal banking. The opening up of the insurance sector

has provided ample opportunities for the banks. ICICI Bank, HDFC

Bank, UTI Bank and several other foreign banks have exploited the

highly profitable end of banking business i.e. the retail segment.

Globalization brings new technology. But today, almost no advocate of

globalization is calling for selectivity. For instance Coca-Cola, Pepsi

were welcomed in country even though they offered little in terms of new

technology. The same can be said of advertising companies and

manufacturers of consumer non-durable goods like soap, detergent,

cereals toothpaste etc.

According to Chris Patten, Chancellor of University of Oxford and

former Governor of Hong Kong globalization that triggered the flow of

investments and growth in the developing nations brought millions out of

44


poverty, particularly in India and China. After the Indian economy

opened up, the level of poverty in the country declined, and had the

reforms been pursued further and faster, the results would have been

better. The untapped potential of the economy remained and there was

immense scope for improvement in the bureaucracy and labor reforms in

order to sustain the economic reforms.

Technology Infusion and Up gradation Challenges

Reluctance to adopt the best practices envisaged by the standard CBS

packages has forced them to resort to heavy customization, leading to

reduced effectiveness and efficiency of the solution. Many large banks

have confined the CBS facility to only 20% or 30% of their branches with

the justification that it will cover 70% to 80% business of the bank. This

has deprived the mass customers of rural branches of the fruits of modern

technology.

Underutilized and unknown to many, there exists a huge potential at the

bottom of the pyramid for banks. It is proved that convenient and anytime

banking channels like Automated Teller Machines serve as good avenues

for the banking system to procure large amount of cash stacked by the

rural folk. It calls for some out-of-the-box solutions to achieve cost-

effective results. Smart cards can come to the help of the remote villages.

Perhaps, the true spirit of financial inclusion can be achieved only when

banks use modern technology extensively.

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Conclusion

“Benefits reaped by Indian Banking sector as a result of globalization

is much more than the setbacks”

To conclude, it can be said that unfortunately, several concerns related to

the banking sector still remain. The chief among these is the matter of

ownership and control. In the near future, India will be forced to apply

the norms of developed countries to the Banking Industry. Consequently,

many Indian banks (including some of the biggest) will show very poor

return ratios and dozens of banks will go bankrupt. Thus, it becomes

imperative that the Banking Industry should streamline itself and become

more compatible with global norms in the fields of operation and

services.

Globalization is a theoretical construct. Its open to various meanings and

inflection. It can be described positively, negatively to describe complex

process in the economy, culture and everyday life. Globalization has

caused suffering to domestic industry, economic crisis in some countries.

Globalization created new risks as well as opportunities. Globalization is

integration of various markets of world into an international market.

Indian Banks have huge financial resources at their disposal. Indian banks

started with aggregate deposits of about 5000 Crores in the Sixties which

increased to 10 Lakh Crores this millennium. This denotes a 200-

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hundred-fold growth in three decades. A major tool which banks have at

their disposal is our knowledge capital-something which is being grossly

under utilized currently. This is an extremely valuable type of capital. In

banking they are short of intangible assets. Our knowledge capital is quite

crucial to the success of banking in India. For this banks cannot garner it

from outside; neither can they go in for a public issue to mobilize

intangible assets.

Therefore banking employees have to embrace the need for higher

learning and better knowledge. Banking in India has immense potential

given the population figures in our country. With a little effort, careful

planning and timely legislation this industry can be brought on par with

the best banks in the world. NRI look forward to new business

opportunities in a globalize India. Another outcome of globalization has

been a huge increase in salaries of senior mangers, accountants, lawyers

and public relation personnel working for MNCs. For the IT literate, job

opportunities have plentiful, and there are opportunities to live and earn

abroad. For the English speaking upper middle class, this has come as

boon.To an end note it can also be said that thorough instant transfers, the

banking sector has facilitated enormous benefits in terms of convenience

and efficiency.

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Documents

Impact of Gloablisationon Indian Banking Sector