Proposal On

By

Khalid Khursheed Qurashi

Jamia Millia Islamia

New Delhi 110025

I. Title Globalisation and its Impact on Indian Banking. II. Abstract This research work will explain and examine the changes, which have swept the Indian banking over
the last 20 years or so. The Indian Banking industry is passing through a testing, challenging and brand positioning i.e. HSBC - The World's Local Bank. IDBI - Aao Sochain Bada, BOB - India's International Bank. It may be called paradigm shift. Public sector hanks can no longer offered to have a fuddy-duddy Image because they will then lose out the younger generation that will Bank with private banks. Change is the name of the Game in this new epoch-'You cannot step into the same River twice', wrote Haraclitus. In this era of globalization, only such Organization will thrive and survive-which stick their necks out, and which are proactive not reactive, and ready to improve and maintain quality. Quality Means doing the right things, the right way, first time and every time. It is this imperative for growth which finds an echo in the phenomenon of mergers and acquisition, greenfield investment, and brownfield investment. It mirrors the main issues like evolution and development of banking, Currency and RBI. CBS, Money and Monetary policy, lead bank schemes, Basel norms, prudential norms, economic reforms, Baking sector Reforms and ramifications of globalization. It is a manuscript of erudiction and scholarship put is written throughout in an engaging and informative style. It also offers new and insightful roads of the subject. Globalisation has changed the World financial system in a big way, as has been the Indian banking industry which passed through huge changes post liberalisation which was of course the Impact of Globalisation which made the Indian banking Sector more organized and increased its overall efficiency, however made it vulnerable to any global economic imbalances. Thus the rationale of this research would be to find out the impacts of globalisation with the coming of foreign players in Indian banking sector on to the overall domestic banking sector.

Research type: Exploratory.

III. Third World & Globalisation A

number of international polls have shown that residents of developing countries tend to view globalization more favorably than residents of the US or the EU. However, a recent poll undertaken by the BBC indicates that there is a growing feeling in the Third World that globalization is proceeding too rapidly. There are only a few countries, including Mexico, the countries of Central America, Indonesia, Brazil and Kenya, where a majority felt that globalization is growing too slowly. Many in the Third World see globalization is a positive force that lifts countries out of poverty. The opposition often combines environmental concerns with nationalism. Governments are often seen as agents of neo-colonialism that open the doors to an invasion of multinational corporations. Much of this criticism comes from the established middle class; a report from the Brookings Institute suggests this is because the middle class perceive upwardly-mobile low-income groups to be a threat to their economic security. Although many critics blame globalization for a decline of the middle class in industrialized countries, a recent report in The Economist suggests that the middle class is growing rapidly in the Third World. Unfortunately, this growth, coupled with growing urbanization, has led to increasing disparities in wealth between urban and rural areas. This leads to a situation where those who have gained the least economically have the most to lose from the negative environmental impact of globalization. For example, in India 70% of the population lives in rural areas and depend directly on access to natural resources for their livelihood. As a result, anti-globalization often takes the form of mass movements in the countryside. The situation is critical in China, where rapid growth has led to a situation where 0.4% of the population possess 70% of the nations wealth. An 2007 article in The Economist blamed increasing unrest in rural China on the growing gap in wealth between rural and urban areas. This, plus growing worker discontent in industrialized areas,. has caused a great deal of concern among the nation's leadership

IV. Introduction
the growing international influence offers Indian banks threefold benefits: The opportunty to service the cross border needs of Indian companies, service the multinationals for their local banking needs and create footprints globally. Rohit Tandon. (Associate Director), Cedar Management Consulting International.

Globalization refers to the increasing unification of the world's economic order through reduction of such barriers to international trade as tariffs, export fees, and import quotas. The goal is to increase material wealth, goods, and services through an international division of labor by efficiencies catalyzed by international relations, specialization and competition. It describes the process by which regional economies, societies, and cultures have become integrated through communication, transportation, and trade. The term is most closely associated with the term economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, the spread of technology, and military presence. However, globalization is usually recognized as being driven by a combination of economic, technological, sociocultural, political, and biological factors. The term can also refer to the transnational circulation of ideas, languages, or popular culture through acculturation. An aspect of the world which has gone through the process can be said to be globalized.

The future outlook of Indian banking industry From large number of small banks to small number of large banks and; enhancing banking competition and efficiency.

Liberalisation & Indian Banking In the early 1990s, the then Narasimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions.
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The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. 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 not just demanded more from their banks but also received more. Since liberalisation, the government has approved significant banking reforms. While some of these relate to nationalised banks (like encouraging mergers, reducing government interference and increasing profitability and competitiveness), other reforms have opened up the banking and insurance sectors to private and foreign players. Currently, India has 88 scheduled commercial banks (SCBs) 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. The public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. Currently (2011), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. 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 stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.

Global market Expansion A report issued in 2007 by PricewaterhouseCoopers LLP predicted that by 2050 the economies of the E7 emerging economies (the BRIC countries: China, India, Brazil, and Russia, plus Mexico, Indonesia and Turkey) will be around 50% larger than the current G7 (US, Japan, Germany, UK, France, Italy and Canada). China is expected to overtake the US as the largest economy around 2025, while India will overtake the US in 2050. A more recent report issued by Goldman Sachs that was compiled after China released their GDP growth figures predicted that China is about to overtake Japan and may become the world's largest economy by 2020. Financial interdependency The world today is so interconnected that the collapse of the subprime mortgage market in the U.S. has led to a global financial crisis and recession on a scale not seen since the Great Depression. According to critics, government deregulation and failed regulation of Wall Street's investment banks were important contributors to the subprime mortgage crisis.

Financial & Economic Effects of Globalisation Emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. Almost all notable worldwide Banking companies have a presence in India. Four Indians were among the world's top 10 richest in 2008, worth a combined $160 billion. In 2007, China had 415,000 millionaires and India 123,000. Realization of a global common market, based on the freedom of exchange of goods and capital.

V. Objective The objective of research is to study the Globalisation and it Impact on Indian Banking Sector. The
area of study would include: To understand Impacts of Globalisation in Banking sector. Study different types of Opportunities/Risks involved with Globalised Indian Banking sector. Detailed study of Major Impacts in Banking Industry after Liberalisation

VI. Methodology Research always start with a question or a problem. Its purpose is to question through the application
of the scientific method. It is a systematic and intensive study directed towards a more complete knowledge of the subject studies. Marketing research is the function which links the consumer, customer and public to the market through information information used to identify and define marketing opportunities and problem generate, refine, and evaluates marketing action, monitor marketing actions, monitor marketing performance and improve understanding of market as a process. Both primary and secondary data is used in the research .To conduct the research the data is collected by two sources. But mostly Secondary data will be collected and analyzed. Primary Data: The primary sources of data refer to the first hand information. Primary data is collected from the Industrys internal policies regarding Management. Secondary Data : Secondary data is one, which already exists and is collected from the published sources. The sources from which secondary data was collected are like Publications of various Financial Institutions, Sources like Economic Times, Business Magazines and Internet.

VII. Research Limitations

Data will been collected on the basis of convenience. As project is being under taken during the college, so time is one of the constraint. Banks and other related Institutions ae not comfortable giving their details on what kind of changes they make and Impacts of those changes on the business of the Bank Area is also one of the limitation as the research will be done in the particular segments taking in consideration the vast Indian Banking Industry.

VIII. References and Bibliography

Meenu Agrawal, Impact of Globalisation on Development Year Of Publication: 2007

ISBN - 9788176290691

Rajesh-Pal, Indian-Banking-and-Globalization Year of Publication: 2009

Publisher: Adhyayan Publishers & Distributors. Brochures provided by the Financial Institutions. www.printsasia.com/book/ Office visits of various companies Websites of Financial Institutions. Reserve Bank of India Website. Economic Times. www.bankofbaroda.com http://en.wikipedia.org/wiki/ Financial institutions www.google.com/scholar/ www.ey.com

Khalid Khursheed Qurashi Jamia Millia Islamia, New Delhi

Place: New Delhi Date: 04-07-2011