Diversification and its Rationale

Diversification is the new mantra banks must chant; must be new flag-ship of the banking industry. Indeed, diversification is the law of life today, the law that will take counties beyond the danger zones of clinging to one type of business year in and year out. Certainly, the old ways of doing cannot, and should not be abandoned in one stroke; this will be like throwing the baby with the bath water But new ways have to be discovered and new practices have to be implemented. The purpose of the study is to identify need for diversification in Indian banking sector and its implication. Findings of the study suggest that diversification has to be a strategy, well planned and well executed. An overdose of diversification will create a problem for any sector.