Indian banking has become strong, stable and vibrant in the post-economic reforms phase. During the last two years, Indian banking has weathered the storm of rising interest rates and falling bond values, by strategically augmenting bank credit, in an environment conducive to economic growth.The new Basel framework provides a methodology for transforming banks into vibrant and stable entities in the globally competitive and dynamic financial markets. In India, the focus of the financial inclusion at present is confined to ensuring a bare minimum access for all to a savings bank account without frills. Internationally, the financial exclusion has been viewed in a much wider perspective. Consolidation of banks, especially public sector banks, has been hotly debated these days. As Indian PSBs have generally the same kind of business models, there may not be any scale or scope for economies due to consolidation. Their operational efficiency cannot be improved either, as their business lines do not complement each other. Even risk mitigation due to diversification across business streams, client segments etc., may not be possible, as the business streams themselves are not different. Nor the client segments, for that matter. Microfinance could result in reduction of vulnerability and poverty alleviation. Microfinance Institutions (MFIs) have to address certain broader community related issues as well. They are low productivity problems, absence of market linkages, poor health and educational standards of the members etc. Bancassurance, apart from generating higher non-interest income, has other spin-off benefits: capturing of huge captive business readily available in branches by asset financed and brought under the Corporate Agency and the likelihood of branches bringing in incremental business by insuring other insurable assets of the borrower.
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