Banking Significance and Segments

BANKING

Executive Summary

The report initially analyses the significance of banks in Indian Economy; the role played by them in strengthening the economy and making it more efficient. It also discusses the major segments of the Indian Banking Sector on the basis of organized status and business. It then describes the segments of Scheduled Banks: Commercial and Co-operative Banks and gives a picture of the structure of the Indian Banking industry. The report also describes the segmentation of the Banking sector on the basis of business: Retail, Wholesale etc.

The various facets of Demand and Supply factors affecting the Indian Banking Sector have also been described and discussed in the report.

The Report later analyses the present market scenario of the banking industry and discusses the strategy adopted by the market leaders of the industry. Special emphasis is laid on HDFC Bank, its market growth and the strategies adopted by it to remain ahead of the league. The report then discusses the current important market trends existing in the Indian Banking sector and the various schemes adopted by the Government to achieve financial inclusion.

Significance

As a key component of the financial system, banks act as intermediaries when they mobilize savings from surplus units (savers) to shortage units (borrowers) in order to finance productive activities. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient.

Banks help in capital formation1 by mobilizing savings and then channelizing them into productive investments. By providing short term loans, the banking sector is financing the industrial sector in India. They are