The assignment explains what kind of scenarios takes place while dissertation. Showing what type of research done and what research methods use to complete the dissertation. It gives clear structure of the growth of banking sector in India. And how will banks affect the economy of the country. Like there three important things we have to remember while doing our dissertation one is conceptual framework second is research made on the project and the third but not the least is methodology.
Conceptual framework is used while presenting the research which was made. We use conceptual framework because even carefully collected results can be mislead if assumption is wrong. Conceptual framework of our study is the system of concepts, assumption, expectations, beliefs and theories that support our study. This is the key part of our system (miles and Huberman, 1994; Robson, 2002). There have defined conceptual framework as virtual or written product and it may explains either graphically or theoretically. In this the main thing should be study like key factors, concepts or variables and presume relationship among them. This may also called as theoretical framework.
The important thing that we have to understand our conceptual framework is that the concept or an idea of what is there to study and what is going on out there. This is how we convert our research into paperwork.
Banking in India:
Banking in India originated since 18th century. The first bank in India was General Bank of Indian which was started in 1786. The oldest bank existing still in India is State Bank of India. During the American Civil War their stopped the export of cotton to Lancashire from confederate states, promoters opened banks to finance trading in Indian cotton. Later most of the banks opened in India during that period of time but got failed. The depositors of those banks lost the money and lost interest in keeping deposits in banks. So banking in India remain decade for the Europeans until beginning of 20th century.
The Role of Banks in the Economy:
Banks play important role in developing Indian economy. The main and primary task of banks is to collect the savings from the people and direct them into productive channels. Actually people in developing countries will not have habit of depositing their savings with banks, the task of spreading and creating the banking habit of countries resource will become challenging one. Banks helps in improving the effective utilization of available resource. Banks acts a bridge between the one who requires finance and the one who has funds but are unable to make an effective and productive use of it. Banks will effectively use the savings which there got. Outcome of this result raise in rate of savings and investments and thereby increase in economy.
To make an account of evolution of present day banking on India
To evaluate the assets of banks in India
Ratio of growth of banks in India
Research Methods and Methodology:
As we know there are two research methods
There are commonly derived from experimental and statistical methods. The main objective of this is to determine the truth of particular pre-determined hypotheses. It is focusing on defining, measuring and counting empirical data. It is linked with positivism, determinism, empiricism.
The methods have their origins like history, sociology, geography and anthropology. It's Focusing on accessing and understanding data as perceptions. It is liked to interpretivisim. It is analysis of texts, conversation and discourse.
Research is Quantitative or Qualitative? :
The research I am doing on Indian banking system is a quantitative research. My research based on the data which was collected by experimenting and comparing. All the data is in statistical form.
The first wave of financial liberalization took place in 1980's, mainly taking the form of interest rate deregulation. During this period almost all interest rates were administered and influenced by budgetary concerns and the degree of concessionality if directed loans. So for some profitability the margin of interest rates kept large by keeping deposit rates low and non-concessional lending rates high.
Based on the 1985 report given by Chakravarty Committee, coupon rates on government bonds were gradually increased to reflect demand and supply conditions. In early 1990's the Narasimha Rao government passed the policy of liberalization and gave license to small number of private banks. So by this move there is a rapid growth in economy of India, then started the banking sector in India, which was seen the rapidly growth in all three sectors of banks; Government banks, private banks and foreign banks.
Following the 1991 report given by Narsimham Committee, more comprehensive reforms took place that same year. The reforms which took place like;
Deregulation of interest rate and entry
Reduction of the CRR and SLR
Shift of banking sector supervision from intrusive micro-level intervention over credit decisions toward prudential regulations and supervision
Prudential norms adoption
Later in 1992 the Reserve Bank of India issued guidelines for income recognition, asset classification and provisioning, and also adopted the Basle Accord Capital adequacy standards.
Challenges Should Face by Indian Banking Industry:
Banking industry in every country has some challenging aspects or issues that should be faced to run successfully. As the banking industry in India has some challenging aspects which it has to face, the challenging aspects are like;
Ever rising customer expectations.
Maintaining the growth rate.
Human resource management.
Making a global mark.
The above are the challenging issues that has to be faced by the banking industry in India for its positive result.
Assets of Banks in India:
Each and every bank has their self assets. So we can calculate the assets of Individual banks, the figures are shown below was taken from RBI, the assets of banks during 2008-09. I took only some banks and showed there assets during that period.
Source: Reserve Bank of India
Amount in Rs. Thousand
Bank Group : Foreign Banks
ABN AMRO BANK N.V.
ABU DHABI COMMERCIAL BANK LTD
BARCLAYS BANK PLC
Bank Group : Indian Private Sector Banks
AXIS BANK LIMITED
CITY UNION BANK LIMITED
HDFC BANK LTD.
ICICI BANK LIMITED
INDUSIND BANK LTD
KARUR VYSYA BANK LTD
Bank Group : Nationalised Banks
BANK OF INDIA
BANK OF MAHARASHTRA
CENTRAL BANK OF INDIA
INDIAN OVERSEAS BANK
Bank Group : Regional Rural Banks
ANDHRA PRADESH GRAMEENA VIKAS BANK
Andhra Pragathi Grameena Bank
Growth of Banks in India:
Scheduled Commercial Banks
Scheduled Co-operative Banks
The number of banks increased rapidly, during 1991 there were 27 public-sector banks and 26 domestic banks with 60,000 branches, 24 foreign banks with 140 branches, and 20 foreign banks with a representative office. Later in between 1993-1998, 24 new private banks (9 domestic and 15 foreign) entered into market. And regional rural banks rose from 75 in 1991-92 to 99 in 1997-98.
The Indian banking market is growing rapidly, and the assets are expected to reach US $1 trillion by 2010. Mainly three factors are contributing for this growth expanding economy, middle class and technology.
The Indian banking industry is in the middle of an IT revolution, focusing on the expansion of retail and rural banking.
Survey on Indian Banking Industry by FICCI:
FICCI conducted a survey on Indian banking industry and analyze the present state and how industry facing challenges.
Indian Banking Industry:
During 2004-05 the survey described that nearly 84% of banking industry were performed good.
Let us say rise in the interest rates by 64%. Majority expects increase by 0.5%
Nearly 88% of the public and private sectors considered HRD rated issues as one of the challenge process of Consolidation.
75% of the foreign bank respondents expresses that time frame prescribe to expand through merger and acquisition should have less and equal number voiced that the guidelines are not in line with international norms
In the area of banking the Free trade agreements (FTA) consider positive step. The available market size and access provided to the Indian banks in the foreign countries should be key factor. 76% of the banks highlighted which entering into such agreement.
95% of the banks intend to increase their exposure further in the area of micro financing
96% of all banks claim that the current growth of non-food credit is sustainable for about 3-5 years
Rising indebtedness followed by lack of technology advancement were identified as biggest challenges that could affect the future growth of retail banking
Project is Inductive or Deductive? ;
Here my project is based on both inductive and deductive because, where as inductive involves in observing facts, behaviors and meanings. And whereas deductive involves in identifying propositions from existing theories and testing them, so the research on this Indian banking it involves both inductive and deductive because for this research I have to observe and collect data and compare the data with another.
Data collection is the primary source for doing a project. Gathering data should be correct, it results to successfully completion of project. Data which was collected is differentiating into Primary data and Secondary data. Well Primary data is getting data directly from internet and web, which leads to the direct result of what we are looking for and the secondary data is collecting and searching data from books, journals etc.. And this data is assumed and this data is compared and then it should be presented.
The data collected for my project is primary data as well as secondary data. Because of this primary and secondary data the research of the project went good.
Each and every individual bank has its own limitations. We can't point out on the whole banking system in India. But we can compare it with other banks. For example we can take government banks were there has limit of providing loans to the customers and but when we take private banks into account there will provide more amount of loan that compare to the government banks even the mortgage value is same. Some banks won't provide online banking facility. So each and every individual bank has their limitations.
How do Banks earn money?
Is interest rate in Indian banks is more that interest rate in foreign banks?
The banking sector in India is changing rapidly day by day. The competition among them is going to be tough and there are going to be proved to be best in the world by financial liberalization under WTO. The banking system in India is quite different than the other banks in the world. If banks want to become strong enough in India then it has to go beyond some issues like efficiency and technology, improvements and profitability and exploring available cost effect solutions.