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February 7, 2018
The financial market in India is under major transformation with several policy initiatives to bring more transparency in financial transaction and also efforts to offer the banking services to people in far flung areas. This would help creating positive business sentiments and improved consumer confidence to prop-up the country’s economic growth wherein the India’s banking sector is likely to play a key role in meeting credit needs of various sectors of the economy.
In this context, the advancements in technology is going to play a major role such as banking services through mobile and interest modes. Encouraged by the Prime Minister vision of Digital India, the banking sector is laying greater emphasis on providing improved services to their clients and also upgrading their technology infrastructure, in order to enhance the customer’s overall experience as well as give banks a competitive edge.
It is also a fact that Reserve Bank of India (RBI) has rolled out certain innovative banking models like small finance banks. The central bank granted in-principle approval to 10 small finance banks in FY 2015-16. With many more in FY17, RBI’s new measure may go a long way in helping the restructuring of the domestic banking industry. The new entrants will intensify competition, particularly in the hinterland of India with new products, technology and higher rates to woo depositors and lower rates to sell loans. Small finance banks will help in bringing the unbanked population under banking gamut, thereby supporting and encouraging the financial inclusion agenda of the Government. These banks will be less dependent on cash and more on digital technology, enabling them to cover people from the hinterland areas deprived from banking services till now.