A new analysis by a consultancy firm finds that public sector banks accounted for 67.2% of the total banking assets and 51.1% of commercial banking assets, which stood at Rs 95.73 trillion in fiscal year 2013. The study, Competitive Landscape and Trends in the Indian Banking Industry, has been carried out by Frost & Sullivan. It said banking assets in India account for 63% of the nation’s financial assets and play a crucial role in economic development. The Reserve Bank of India is expanding the industry through financial inclusion and priority sector lending. This is increasing the rural and urban population’s access to banking services, reflected in the decline in the average population per branch from 15,600 to 12,500 in 2012 as penetration increases, the study said. It also brought out that currently, the country follows a universal banking model, where bankers are present across all segments and serve all customers. Nevertheless, a shift in business model is required to keep up with the changing needs, demand and demographics. A four-tier international, national, regional and local structure has already been proposed and is expected to lead to the emergence of different business models such as specialist, advisory, and priority sector banks. “The Indian banking system is on an upward growth trajectory and is expected to be the third largest banking industry worldwide by 2020,” said an analyst involved in the study, adding, “However, this goal can only be achieved by implementing liberalization norms proposed by the Reserve Bank of India (RBI), which focus on issuing on-tap banking licenses and specialized banking licenses, encouraging consolidation, improving operational performance of small and nationalized banks, complying with global regulations, and increasing overseas presence.”
