Volume : I, Issue : II, July - 2012

“Indian Banking – A Future Ahead”

Haresh B. Barot

Abstract :

In recent times economy is been pushing to widen the role of multi-national banks in the banking sector. In spite of the concern expressed by the left communist parties are opposing the finance minister move to raise overseas investment limits in the banking sector. The government wants to fulfill a guarantee to allow companies to raise investment in local companies to 49 per cent from 26 per cent. But it is opposed on the front that it will lead to state run players loosing business and workers their job. Left does not want foreign investors to have greater voting rights in private banks and oppose the privatization of state run pension fund. There are several reasons why such move is fraught with dangers. When domestic or foreign investors acquire a large share holding in any bank and exercise proportionate voting rights, it creates potential problems not only of excursive concentration in the banking sector but also can expose the economy to more intensive financial crises at the slightest hint of fear. Opposition is not considering the need of present situation. FDI in banking sector can solve various problems of the overall banking sector. Such as • Innovative Financial Products • Technical Developments in the Foreign Markets • Problem of Inefficient Management • Non-performing Assets • Financial Instability • Poor Capitalization Indian federal government has opened up the banking sector for foreign investors raising the ceiling of foreign direct investment in the Indian private sector banks to 49 percent. However, the ceiling of FDI in the country\'s public sector banks remains unchanged at 20 percent. Foreign banks having anches in India are also entitled to acquire stakes up to 49% through automatic routes. It is to be noted that under automatic route fresh shares would not be issued to foreign investors who already have financial or technical collaboration in banking or allied sector. The objective of present paper is an attempt to highlight the changing scenario of banking sector in post liberalization period, challenges facing by the industries and future ahead.

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

Haresh B. Barot “Indian Banking – A Future Ahead” International Journal of Scientific Research, Vol.I, Issue.II July 2012

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