Abstract :
Financial Institutions plays a vital role in development of any
country. The financial institution has to run as per the rules and regulations
of the motherland and has to facilitate the user and generate currency for its
country. In this paper I am going to discuss the emerging challenges in front
of our Banking sector.
There are
currently 27 Public sector Banks banks
in India out of which 19 are nationalised banks and 6 are State Bank of India and its
associate banks, and rest two are IDBI bank and Bharatiya Mahila Bank, which
are categorised as other public sector banks. There are total 93 commercial
banks in India. (it
is from internet Wikipedia as on 31st
Jan 2017)
When Indian Government allowed private banks to operate in
the nation many banks came into existence and gave a tough competition to
various nationalised Banks. The quality of services rendered to their customers
by Private Banks is much attractive and the nationalized banks are lagging
behind. The customers today have more choices in choosing their banks. Thus a
competition has been established within the banks operating in India. The competitive spirit of Indian banking industry is passing
through a phase of customers market.
In the light of competition among the banks and
other financial institutions the Banking sector has to reconcile and redefine
its stand in the global market and offer their best services to the customer.
In the process, they may have to encounter certain challenges and redress them
at the earliest. Some of the points discussed in the paper are furnished under.
1)
Management of Non – Performing Assets (NPAs)
in Banks
2)
Work Life Balance Emerging
Issues
3)
Technology and its support
4)
Treating customer fairly
5)
Risk management
6)
Job Satisfaction in Banking Sector
7)
Emerging Challenges before Banks in the wake
of Demonetisation
8)
Technology in Banking sector
9)
Digital Banking :
10) Digital wallets
11) Artificial Intelligence and Banking
Some suggestions have been made in this
paper and finally concluded with a hope that the Banking sector will offer
their best services and contribute their might in building the financially
healthy nation.
Most of data has been obtained from the
Internet and the remarks are made from my perspective.
While submitting the paper, I should thank
the management organising the seminar and especially Dr. S. Upendra Shastry,
who has given me an opportunity to participate in the seminar.
Thank
you.
With
regards
Palakurthy
Rama Murthy
Main topic
BANKING SECTOR IN INDIA – EMERGING CHALLENGES
Introduction:
The
Agricultural sector, Industrial sector and Service sector are the lifelines for
the prosperity of a nation. Production, protection and right utilisation are
the main factors for ensuring happiness of the people. In India or even in the
world, there is no deficiency in production but there is a problem in distribution.
Distribution problem is due to lack of understanding. Lack of understanding of
self i.e individual (I don’t know what my physical requirements or necessities
are), lack of understanding the relationship between the individual and family
and lack of understanding between the family and the society is leading to
deprivation. Deprivation is presenting us conflict and conflict is presenting
us disharmony and finally we are blessed with destruction.
As
today, we are concerned with critically
examining the emerging Issues and challenges relating to service sector
stressing on Banking sector, few lines, I would like to share with you all.
Financial
sector, which is a part of Service sector, is the much attracted sector in the
economy of any Nation. The Banking sector is the most important in the
financial sectors. As the banking sector is considered as one of the most vital
contributors to the economic growth of any nation, it serves as the central
channel for all economic activities. Therefore, the banking sector is
attracting the focus of policymakers and academicians.
As
the banking sector is an important financial sector, there is a need to look
into and analyse and evaluate the emerging challenges ahead in the light of
global scenario.
Banking in India:
In
ancient India, there was a concept of “usury” and there were condemns of the
system. Though, the Manusmriti, accepted usury as means to acquiring wealth, it
has also considered lending money at a higher rate is grave sin. The Dharma Shastras also supported
the use of loan deeds and Kautilya has also mentioned the usage of loan
deeds.
In
the modern sense, Banking in India originated in the last decades of the 18th
century. Among the first banks were the Bank of Hindustan, which was established in 1770 and
liquidated in 1829-32; and the General Bank of India, established in 1786 but
failed in 1791.
The
largest bank, and the oldest still in existence, is the State Bank of India (S.B.I). It originated as the Bank of Calcutta in June 1806. In 1809, it was renamed as the Bank of Bengal. This was one
of the three banks funded by a presidency government. The other two
were the Bank of Bombay and the Bank of Madras. The three
banks were merged in 1921 to form the Imperial Bank of India, which upon
India's independence, became the State Bank of India in 1955. For many years the presidency banks had
acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935, under the Reserve Bank of India Act, 1934.
Foreign banks too started to appear, particularly in Calcutta, in the 1860s and another in Bombay in 1862; branches followed in Madras and Pondicherry.
Though,
the Indian economy became relatively stable during 20th century and
the social, industrial and other infrastructure had improved, the exchange
banks, mostly owned by Europeans, concentrated on financing foreign trade.
Indian joint stock banks were generally undercapitalised and lacked the
experience and maturity to compete with the presidency and exchange banks.
The
years of the First World War were turbulent, and it took its toll with banks
simply collapsing despite the Indian economy gaining indirect boost due to war-related economic
activities. At least 94 banks in India failed between 1913 and 1918 as
indicated in the following table:
Years
|
Number of banks
that failed |
Authorised Capital(₹ Lakhs)
|
Paid-up Capital(₹ Lakhs)
|
1913
|
12
|
274
|
35
|
1914
|
42
|
710
|
109
|
1915
|
11
|
56
|
5
|
1916
|
13
|
231
|
4
|
1917
|
9
|
76
|
25
|
1918
|
7
|
209
|
1
|
The Government of India, after
independence, initiated
measures to play an active role in the economic life of the nation, and the
Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted
in greater involvement of the state in different segments of the economy
including banking and finance. The major steps to regulate banking included:
The Reserve Bank of India, India's central banking authority, was
established in April 1935, but was nationalised on 1 January 1949 under the
terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948
(RBI, 2005b).
In
1949, the Banking Regulation Act was enacted, which empowered the Reserve Bank of India (RBI) "...to regulate, control, and inspect the
banks in India."
The
Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could
have common directors.
By the 1960s, the Indian banking industry had become an
important tool to facilitate the development of the Indian economy. At the same time, it
had emerged as a large employer. Though, there was control and regulations of the Reserve Bank of India,
all the banks, except the State Bank of India (SBI), remain
owned and operated by private persons.
At the
very same time, the first five year plan was introduced.
In
July 1951, the Planning Commission issued the draft outline of the First Five
Year Plan for the period April 1951 to March 1956. It was presented to the
parliament in Dec. 1952 by the Planning Commission.
The
total proposed outlay was Rs. 3,870 crore of which Rs. 2,070 crore (later
raised to Rs. 2378 crore) was the outlay of the public sector. The actual
public sector outlay was Rs. 1960 crore. About 44.6% of the total public sector
outlay was devoted to development work. The investment of the private sector
amounted to Rs. 1800 crore.
India’s
First Five-Year plan was a brave effort. The success achieved in many fields
was remarkable and, in many cases, the plan targets were exceeded.
Though,
there was a progress in many fields with respect of Indian economy, the banking
system was not co-operative. Analysing the shortfalls of banking system, the
then Prime Minister, Smt. Indira Gandhi, expressed her intension to nationalise
the Banks and everybody have welcomed the Idea. Thereafter, her move was swift
and sudden and the Government of India issued an ordinance nationalising 14
largest banks in India with effect from midnight of 19th July 1969.
The move was acknowledged by several eminent persons like Jayaprakash Narayan
and the parliament passed the bill in two weeks and it has been approved by the
president on 9th August 1969.
Further,
6 more banks have been nationalised and it has given more control to the
Government over credit delivery. After merging, “new Bank of India with Punjab
National Bank, in 1993, the number of nationalised banks in India, became 19.
There are currently 27 Public
sector Banks banks in India out
of which 19 are nationalised banks and 6 are State
Bank of India and its associate banks, and rest two are IDBI bank
and Bharatiya Mahila Bank, which are categorised as other public sector banks.
There are total 93 commercial banks in India. (it is from internet Wikipedia as on 31st Jan
2017)
After
liberalisation, from 1990s, the Government has given licences to some private
banks and foreign banks. This move has established a rapid growth in Indian
economy from strong contribution of all the three sectors i.e. Nationalised
Banks, Private Banks and foreign Banks.
Because
of certain relaxations by the Government in Banking sector, the foreign
investment have gone up to 74% from 10%.
The 4–6–4 method (borrow at 4%; lend at 6%; go home at 4)
of functioning was used by the bankers. 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. People demanded more from their banks and received
more. After nationalisation, the motives of individuals have changed to bad and
corruption has entered into the system.
The growth of Banking in India of scheduled commercial
Banks have touched remarkable figure. When we analyse the results of 2013
against 2005…...
The aggregate deposits have increased from ₹17,002 billion to ₹67,504.54
billion. Number of Branches of banks has increased from 70373 to 109811. Per
Capita Deposit increased to ₹ 56380 from ₹16281. Per Capita
Credit increased from ₹10,752 to ₹44028. The Credit Deposit Ratio was at
79% against 63%.
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.
The Financial Crisis in 2008 had an adverse effect on the
global economy and it has continued to face rough weather. Though, the Indian
economy was not an exemption, it could survive because of its strong
foundations.
The
banks are the lifelines of the economy and play a catalystic role in activating
and sustaining economic growth, especially, in developing countries like India.
Though the foundations of banking system is strong, certain factors like
corruption, hike in oil prices, uneven prices of commodities and non recovery
of loans due to political pressures are pulling down the economic growth of
India.
In
the light of the above, our banking system, at the present juncture is,
however, facing significant challenges. These challenges are to be addressed
quickly and adequately otherwise it may result in inertness in the economic
growth. Also, it will have implications on both- the banks as well as the economy
as a whole because a strong banking system is one of the essential
pre-requisites in the quest for growth.
So,
today there is a need to focus on the emerging challenges for the banking
system at the current juncture.
i) Asset
quality: There is a pressure on asset quality. The ratio between GNPA (Gross
Non Performing Advances) and NNPA (Net Non Performing Advances) is at alarming
state. As per the preliminary data received at RBI for March 2015, while the
GNPAs have increased to 4.45% for the system as a whole, the NNPAs have also
climbed up to 2.36%. When seen in isolation, the NPA ratios do not appear very
distressing; however, if we add the portfolio of restructured assets to the
GNPA numbers, this rises alarmingly. Stressed Assets Ratio (Gross NPA+
Restructured Standard Advances to Gross Advances) for the system as a whole
stood at 10.9% as at the end of March 2015.
For
example, the Sahara group chairman and Vijaya Malya have taken huge amounts and
are not repaying instalments. It is creating stress on the Bank and the NPAs
are increased by size. It is because of their intentions are bad. The political
intentions and the intentions of the bank officers at higher end are bad. At
last the bank has to write off their bad debits which has an adverse effect on
the balance sheet of the Banker at one end and the intentions of the political
party was at stake.
Also,
it is pertinent here to note that the observations made in the Global Financial
Stability Report released by IMF. Referring to the high levels of corporate
leverage, the report highlights that 36.9 per cent of India's total debt is at
risk, which is among the highest in the emerging economies while India’s banks
have only 7.9 per cent loss absorbing buffer.
As
we all are aware, the RBI is taking various steps to improve the system’s
ability to deal with corporate and financial institutions distress. RBI has
issued guidelines on "Early Recognition of Financial Distress, taken
several Prompt Steps for Resolution and detailed guidelines on formation of
Joint Lenders’ Forum (JLF), Corrective Action Plan (CAP), ‘Refinancing of
Project Loans’, ‘Sale of NPAs by Banks’ and other regulatory measures, which
emphasized the need for early recognition of financial distress and for taking
prompt steps for rectification, restructuring or recovery, thereby ensuring
that interests of lenders and investors are protected.
ii) Capital Adequacy of Banks: There is a demand to raise the additional capital in order
to support the business.
iii) Forex Exposures: Corporate
sector is borrowing huge forex from abroad. The impact of repayment of forex
liabilities is creating considerable stress in the banks.
iv) LCR Framework: The
Liquidity Coverage Ratio (LCR) regime has kicked in for the banks from January
1, 2015 with a minimum requirement of 60% to be gradually increased to 100% by
January 1, 2019 in a phased manner.
v)
Human resources Issues: There are 26 PSBs in India contributing their might in the
growth of Indian economy. PSBs hold about 75% of the market and about 18% are
shared by the private sector and another 7% is owned by the foreign banks.
Banking sector was one of the most protected sectors for the last five decades
and over the last three decades; there has been a remarkable reforms in the
Indian banking sector. Now, Business profiles of Banks has transformed and
major challenges faced by banks. Thus an integrated cooperative drive has
provided a common platform for Banks. However, the challenges faced in the HR
front are numerous.
As
the global scenario in respect of business has undergone several changes and
banking sector has no exemption, sustainability and prosperity demands certain
transformations of organisational outlook. In the light of the above, there is
a need for ….
a)
Upgrading the
Technology
b)
Customer centric
business
c)
Positive response to
the competition
d)
Transparency
e)
Skilled work force
The
challenges mentioned above are to be attended immediately and Human resources
management plays a vital role in solving those problems. The commitment and
involvement of employees would be the base line for attaining the desired
results.
Further,
the major challenge in banking is to attracting and retaining the right
customer. Retention of potential / real customer affects profitability. A study
shows that increase of 5% in retaining of customer will increase the
profitability by 35% in banking business.
A
large number of research papers identified customer satisfaction as an
indispensible and an essential action for customer loyalty, retention,
behavioural intention, market share and profitability. In this regard we cannot
forget that the satisfied customer not only make business with the organisation
but also engage in positive word of mouth advertising and be more tolerant of
price increase even.
The
crucial role of HRD in this regard is to identify the human resources with….
1)
Poor
knowledge of work
2)
Poor
Skills and abilities
3)
Poor
intention to learn
4)
Typical
behaviour patterns (Resistance to Change)
5)
Poor
family background and low social status
6)
High
financial commitments
7)
Burden
of dependants and High personal responsibilities
8)
Marital
Status
9)
Improper
interpersonal relationships
10)
Lack
of Job satisfaction
Most
of the above problems are common in any organisation and banking sector has no
exception. Unless the problems are identified and acted upon in time they may
lead to distress and the objective of the organisation will be defeated.
The
employee is also occupying a unique and sensitive position in banking sector.
No meaningful change is possible in the banks without the involvement of the
employees. If the banks have to take any significant measure to adopt
themselves to new competitive environment, one of the most crucial initiatives
to be undertaken is the organisations preparation of its employees to update
them with the requirements of competitive banking.
We
must not forget that an unsatisfied and frustrated employee cannot put up
excellent results. That will reflect upon the customer relations and
profitability.
The
effectiveness of the service provided by the employee is influenced by many
factors like promotion, job security, working schedule etc. But such
motivations will be momentary. The employee should be motivated so as to work
with his natural acceptance and for mutual happiness i.e. the Bank and
customer. Working with fear of punishment or with an attraction of rewards does
not motivate an employee for a longer time. Instead they must be motivated to
work with freedom.
Working
more under constant pressure may bring down the efficiency of an employee.
Employees, with job satisfaction, will contribute for productivity because it
is from their natural acceptance and their contribution will be much towards
customer satisfaction. It is because of the satisfied employees create a
congenial environment for their customers. It applies to all the managerial
sectors including banking sector.
Work
– Life balancing is much more important to every employee. There is a saying
that Live and work with happiness but do not work and live for happiness.
Faculty
i.e. updating their technical and academicals should be their priority and the
management should provide necessary environment including training facilities
to the employees.
It
is the primary requirement of the organisation and employees to have mutual
faith. It ensures mutual happiness. The bank need to judiciously ensure that
the expectations of the employees are met and create such atmosphere so that
every employee is satisfied and work with faith.
Family
would be the ultimate for every employee and ensuring peace in the family will
enhance the work efficiency of an employee. So, the bank may look into the needs of the
family members of the employee and try to assist the employee in fulfilling the
demands of such family members under certain limitations formulated by the law.
In
this connection, in order to ensure employee loyalty and to retain loyal and
efficient employees the following may be considered.
Adjustable
working arrangements like flexible timings and sharing of jobs may yield good
results, especially, when the lady employees need them. Child care centres may
be looked into.
Employee
assistance programmes for counselling and internal and external training
facilities may work better.
Technology and its impact: All most all the PSBs have switched over
to new technologies. Several ATM machines have been installed and internet
banking system has been introduced. Anywhere banking services have been
introduced and some banks are offering services on mobiles. Traditional businesses are slowly moving on-line and
e-commerce is the preferred choice of young customers. This is no doubt
catering the needs of customers effectively and most of the cases the services
are up to the customer satisfaction. But at the very same time the cyber crimes
have increased and all the security measures are failing to a large extent.
The challenge before the PSBs is to upscale their
capabilities, train their employees on the new technologies to benefit from the
possibilities that adoption of technology can open up. The recruitment of
youngsters in the workforce is an encouraging factor for banking sector. The
young generation is more dynamic and easily exposed and adoptable to the new
technologies. The senior / Top Management should change their mind-set and transform
to the need of the day. This will facilitate the PSBs to compete efficiently
and effectively with the private sector counterparts in future.
The
“Pradhan Mantri Jan Dhan Yojana (PMJDY) was a move towards demonetisation. The
efforts put up by the Banking staff are really remarkable and more than 14.5
crore accounts have been opened. It was intended to safeguard the interest of
general public and to transfer the social welfare amenities amounts directly to
the party’s account. But most of the cases the accounts were turned to inactive
and after demonetisation the accounts have been used by the black money holders
to transfer their black money to make them white.
Treating Customers Fairly: Today, the prime objective of Reserve Bank of
India is to protect the interest of customers. Accordingly all the Banks are
moving. Recently, RBI has issued a Charter of Customer Rights based on the
global best practices. The Charter comprises of following five rights:
1) Right
to Fair Treatment
2) Right
to Transparency, Fair and Honest Dealing
3) Right
to Suitability
4) Right
to Privacy
5) Right
to Grievances Redress and Compensation
It is for strict compliance for all the Banks which requires a lot
of attention and patience.
Further, there are certain instances of fake e-mails informing
unsuspecting customers to make payments to certain bank accounts as a precursor
for receiving prize or lottery winnings from abroad. It is surprising that even
well-educated individuals are falling in this trash and becoming prey to such
incredulous offers. Though, it is the responsibility of the customer to be very
cautious, the banker cannot go out of his responsibility as most of this money
is being transferred through banking channels. Compliance with the Know your
customer (KYC) norms are mandatory to the banker. There are some instances
where some of the banks have been fined for not adhering to KYC norms.
Bankers are to be more vigilant to the balance sheets submitted to
the banks while forwarding loans to the industries. Balance sheet Management
has become very common aspect in managing bank loans and prove the efficiency
of CEOs and CMDs.
Risk Management: Risk is inevitable in any
business and banks are also subjected to Risk. Today the Indian Economy is in
the process of becoming a world class economy. The
Indian banking industry is making great advancement in terms of quality,
quantity, expansion and diversification in its business. Indian economy is moving up with the updated
technology, ability, stability and thrust of a financial system, where the
commercial banks play a very important role. The need of a strong and effective
control system with extra concern for the risk involved in the business is made
very essential, today. Liberalization, Privatization and Globalization (LPG)
have opened up a new methods of financial transaction where risk level is very
high.
Frankly speaking, there is a relationship between Risk and Return.
“Maximizing return for a given risk” and “minimizing risk for a given return”
should be the norm while going for business. It is the responsibility of the
top management for setting up a risk appetite so that the interest of the investor
and shareholder is well protected and the trustworthiness of the bank is not
affected. As the risk factor depends
upon the prevailing circumstances, the board or the top management has to
decide it as per changing market dynamics and the regulatory prescriptions.
Demonetisation: The decision of
demonetisation of Rs.1000 and Rs. 500 currency notes by the central Government
on November 8th, 2016 has a tremendous impact on Indian economy and
especially on banking sector. The Prime Minister of India, Sri Narendra Modi,
while declaring the decision in a press meet opined that the demonetisation is
the fight against the black money, uncirculated money and fake currency. Though,
the intension was good, the approach has created chaos in rural and urban
India. The expected demonetisation currency is of Rs. 15.4 trillion and 97% of
the demonetised bank notes i.e. to the tune of Rs. 14.97 trillion have been
deposited in the bank.
Honourable
President of India Sri Pranab mukharji, welcomed the stand. Large number of
international responses towards the move was positive and there were several
remarks stating that the move as a bold and crackdown on corruption.
Human
trafficking, Radical groups, stone pelting in Kashmir valley and Hawala myopias
have come down and were controlled.
Though
the move was sudden and swift, there is a suspicion that certain leakages have
taken place before announcing the decision. The chairman of SBI had openly
spoken in April 2016 about the possibility of demonetisation of Rs. 1000 and
Rs. 500 notes.
Many
opposition leaders have also criticised the move and commented that it is
useless action. There were some negative impacts of demonetisation of currency.
Lack
of proper planning and preparation has caused for cash shortages and normal
public was to suffer in serpentine queues for longer hours. Also some deaths
have been registered in queues. Automatic Teller
Machines (ATMs)
have not been re-calibrated to dispense the new notes. Stock markets
have crashed and incurred huge losses. There was a halt in transportation.
Agriculture has suffered a lot as there would be only cash transactions and
inadequate cash could not satisfy their needs properly. Because of no viable
market, much of the agriculture product dumped in the market could not get
proper returns to the farmer. Banking business was badly hit as more staff for
more than a month has been engaged in exchanging of money alone. E-commerce
business has been hit badly. The cash-on-delivery business saw a decline in
their business by 30%. Several Global analysis reveal that corporate companies
have cut their forecasts by 1% for the Indian economy. Also, there was a drop
in industrial output.
As
the demonetisation is the primary step towards digitalisation, the role of
Banks in that direction is more crucial. The Government, top management of
Banks, employees and customers are pillars of the banking sector and they have
to strive hard to transform the proposition of the fruits of demonetisation
into reality. Existence and Sustainability of Banks are directly proportionate
to the customer satisfaction. Unless the employees feel responsible and work
with commitment, it is not possible to achieve desired results.
Technology in Banking
sector:
Change
is an inevitable factor and in an emerging world either we should change or
perish. Banks have no exemption and should create greater space for innovative
technologies to compete in the market. The digital wallets, is a payment
mechanism without any exchange of physical currency. The rise of digital
wallets is disrupting banking and it is changing the entire dynamics. It is all
started by APPLE with its Apple pay in United States and Alibaba with its
Alipay in china.
Digital Banking
:
DBS
bank which is based at Singapore initiated an innovative product called ‘DBS Digibank’.
It has an advantage of mobile internet Banking with centralized Aadhar e-kyc, PAN card related information. The DBS
Digibank is a branchless and paperless mobile bank. Becoming a customer would
require download an app and a biometric authentication process at any of the
designated café coffee day centres.
Visiting
a bank and submitting documents is traditional way of doing the things and
still we follow it. Customers in India don’t mind spending an hour in a bank to
open an account but when we look at the way Reliance Jio adapted Aadhar based
e-kyc where a customer need not submit all documents, just a biometric
authentication would do .I am sure in coming days more banks will adapt this
technology of mobile based online biometric authentication.
Central
government already implementing aadhaar based authentication for social
security schemes by doing that it is eliminating delays and corruption. I am
sure banks will use this e-kyc in the future by doing that they will eliminate
delays and paper based documentation.
Even
our live certificates are digitalised and we can submit online fingerprint
authentication.
Digital wallets
: (payment technology)
‘The mobile-wallet market in India is expected
to grow at over 190 per cent to reach Rs 1,512 billion by financial year 2022
from the current level of about Rs.1.5 billion, says a study conducted jointly
by trade body Assocham and business consulting firm RNCOS’.
“It
is anticipated that market value of m-wallet transactions in India will grow at
a CAGR of over 200 per cent to reach Rs 275 trillion by FY2022 from Rs 206
billion in FY 2016,” said the study
This
is a big challenge to the traditional banking system ,private banks have
already introduced mobile wallets ,now PSU banks like SBI released new one
.This is more of an urbanized phenomena but will have an impact on the way we
do transactions/payments.
Artificial Intelligence
and Banking:
In
normal language it is nothing but ‘ability to do things by machines previously
done by humans. It has motivated all industries to look into and Banking is not
an exception. This will facilitate to improve operating efficiency and cost efficiency
of banks over a period of time.
Indian
Banking industry is slowly adapting Artificial Intelligence. For example, we
can understand when we chat with customer care, may be a machine is answering
our queries and this eliminates the human intervention. Artificial Intelligence
drastically improves the efficiency but there is a threat of losing jobs. Yes,
there is threat of losing jobs by adopting new technology but it will also
create new jobs in different way. Mukesh Ambony has opined that Innovative technology
is only the media to create new jobs in new service sectors. Indian banks like
ICICI and DBS bank introduced /going to introduce Artificial Intelligence based
apps.
‘Artificial
intelligence can help banks’ finance teams to reimaging and restructure
operating models and processes. Large
banks must process huge volumes of data to generate financial reports and
satisfy regulatory and compliance requirements.
These processes are increasingly standardized, but still involve large
numbers of people performing low-value-added tasks (often in reconciliation and
consolidation), making them for robotic process automation (RPA).
Artificial
intelligence will transform the way banks process back office data, customer
care and regulatory and compliance requirements.
The
emerging concept in the international market is robo advisors; it is an online
wealth management service that
provides portfolio management services without human intervention.
And
finally, we need not be astonished to see that a robot is welcoming us when we
visit a bank. It may happen in near future. Private sector banks in India like HDFC
are planning to engage physical robots in their branchs .
Suggestions: In spite of several technological
changes, the agriculture sector is not to be ignored and I strongly feel that
the farmers are the backbones of our nation. The pride of the nation lies when
the head of the farmer is high. Unfortunately, they are not recognised to their
respect. There is a need that they are to be recognised to be the owners from
beggars’ state. To achieve self-sufficiency in food sector the farmer has to be
encouraged. In this connection, I strongly advocate for waiving of interest for
farmers and lend money to them in time generously. It may also be considered to
lend them with lower rate of interest or even without interest also. There is a
need to increase the production and productivity in the agriculture sector for
which the Government may consider to extend free power and seeds to motivate
number of formers to incline towards such sector.
The education sector is also a prime sector whose contribution
would be more in the development of any nation. To encourage deserved students,
lower interest rates may be charged to deserve candidates so as to encourage
them to upgrade their technical knowhow and skills.
Also the housing sector may be encouraged with forwarding loan generously
at a lower rate of interest.
Conclusion:
Right
now, I have no evidence of figures but it is learnt from unauthorised sources that
average NPAs in PSBs are at 20%. There is a need to reduce it to minimum. Lack
of ethical values in top Banking Officers is causing for increase of NPAs.
It is said when there is no pain there will be no gain. A business
always gives happiness and it is risky also. Humans are not “beings” alone we
are becomings even. Though the becoming is part of being, we cannot be static.
Our nature is dynamic. Dynamic people are not problem oriented but solution
oriented. Doing by understanding always gives better solutions. Identify the problem attend it at the
appropriate time and optimise the result. Educate yourself to analyse the
problem critically. Remember that the education not handled properly becomes a
problem. Problems taken as challenges always energise the underlying thrust of
individual and motivate to achieve the destiny. Have a right intension that
will enhance your competence. There is a proverb in English, “Every cloud has a silver lining”. The future leaders in
the banking industry would be those who identify this silver lining early and
initiate necessary steps to leverage the opportunity.
Thank you.
