Banking Industry in India-Towards a Competitive Landscape

The prognosis for Indian banks looks positive with the domestic credit as a percentage of the GDP having grown substantially over the last decade. This was primarily because the conventional policies of the RBI have worked well to limit India's exposure to the sub-prime crisis of 2008, which stemmed when regulators eased their grip on financial corporations, thereby leading to the high risk leveraging of assets. Though the government is working hard to control inflation rates, the industry expects full implementation of Basel III norms by March 2018. This will require a considerable credit raise, especially for public sector banks. This article analyses the current state of the banking industry, and its future growth potential. The article also highlights certain key challenges, such as controlling non performing assets and financial inclusion.