BANKING

INDUSTRY
 BANKING INDUSTRY MEANING

The banking industry refers to businesses and organizations

1. Deposits: Customers can deposit money into various types of accounts, such as savings,
checking, or fixed deposits.
2. Withdrawals: Customers can withdraw money from their accounts as needed, either in
person or through ATMs.
3. Loans : Banks provide loans for purposes like buying a house, car, or for education,
charging interest on the borrowed amount.
4. Payments: Banks facilitate payments, including bill payments, online transactions, and
money transfers between accounts.
5. Foreign Exchange: Banks engage in currency exchange and international money transfers,
helping businesses and individuals make transactions across borders.
TYPES OF BANKING INDUSTRY

1. Commercial Banking: These are the most common types of banks where individuals
and businesses can save money, take loans, and open accounts.
2. Investment Banking- Help companies and governments with large financial
transactions, like raising money through stocks or bonds.
3. Online Banking - These operate only on the internet and do not have physical
branches.
4. Savings Banking – Focus on helping people save money and earn interest
5. Central Banks: These are government-owned banks that manage a country’s
monetary policy and control the money supply, such as the Federal Reserve in the
U.S.
 IMPORTANCE OF BANKING INDUSTRY

1. Financial Stability: Banks help maintain the stability of the economy by providing safe places
to store money and offering loans to individuals and businesses.
2. Credit and Loans: Banks provide loans to people and businesses, which helps them invest,
buy homes, or start new ventures, boosting economic growth.
3. Payment System: Banks facilitate easy payments through checks, debit cards, and online
transfers, making everyday transactions convenient.
4. Savings and Investment: Banks help individuals save money and invest for the future,
providing interest on savings accounts and investment products.
5. Economic Growth : By funding businesses and projects, banks play a key role in driving
innovation, job creation, and economic development
CONTRIBUTION OF GDP IN BANKING INDUSTRY
. Overall Contribution: The banking and financial services sector contributes
about 7-8% to India’s GDP.
. Growth: The banking sector has been growing steadily due to increased demand for
financial services, digital banking, and economic development.
—Direct and Indirect Impact:—
1. Direct Impact: Banks contribute directly through their core activities such as
lending, deposit-taking, and wealth management services.
2. Indirect Impact: Banks support various industries (like retail, infrastructure, and
manufacturing) by providing them with financial products, thus boosting overall
economic activity.
4. Employment: The banking sector is one of the largest employers in India,
supporting millions of jobs directly and indirectly.
 GOVERNMENT INITIATIVES OF BANKING INDUSTRY

1. Pradhan Mantri Jan Dhan Yojana (PMJDY): Aimed at financial inclusion, this initiative
encourages people to open bank accounts, even in rural areas, by offering zero-
balance accounts.
2. Digital India: Promotes digital banking services and cashless transactions, making
banking more accessible to people across the country.
3. MUDRA Scheme: Provides micro-financing to small businesses and entrepreneurs,
offering loans up to Rs. 10 lakhs.
4. Pradhan Mantri Jeevan Jyoti Bima Yojana: Life insurance cover to people, especially
targeting low-income individuals, through banks.
5. Atal Pension Yojana (APY): A pension scheme targeted at workers in the unorganized
sector, encouraging saving for retirement.
DEMAND OF BANKING INDUSTRY

1. Consumer needs: People need savings accounts, loans (like mortgages or personal
loans), and credit cards.
2. Business needs: Companies rely on banks for business loans, cash management
services, and payment solutions.
3. Economic growth: As the economy grows, there is more need for financial services
to support businesses and individuals.
4. Digital Banking: There is an increasing demand for digital services like mobile
banking apps, online transactions, and digital wallets. Customers want convenience,
24/7 access, and ease of use.
5. Population Growth and Urbanization: As the population increases, so does the
demand for banking services. More people mean more customers for financial
institutions.
CURRENT BUDGET ABOUT OF BANKING INDUSTRY
1. Support for Rural and Semi-Urban Banking Infrastructure: To enhance banking
access in underserved areas, the budget includes provisions for expanding banking
infrastructure in rural and semi-urban regions, ensuring equitable financial services
across the country.
2. Reduction in Non-Performing Assets (NPAs): The budget proposes reforms to
enhance judicial efficiency and regulatory frameworks, aiming to reduce NPAs
and improve asset quality in banks.
3. 100% Foreign Direct Investment (FDI) in Insurance: The budget proposes
allowing 100% FDI in the insurance sector, aiming to liberalize and attract more
investment.
4. Technology and Digital Transformation: Significant funds are allocated to
upgrading core banking systems, improving online banking experiences, and
integrating AI for better customer service and fraud detection
 CHALLENGES FACED BY BANKING INDUSTRY
1.
1. Competition: New financial technology companies and digital wallets are increasing
competition for traditional banks.
2. Interest Rate Fluctuations: Changes in interest rates can impact banks’ profitability,
particularly in lending and savings.
3. Cybersecurity Threats: Banks are prime targets for hackers. Protecting customer
data and preventing fraud are major concerns.
4. Technological Advancements: The rise of digital banking and fintech companies
requires banks to constantly upgrade their technology to stay competitive.
5. Economic Uncertainty: Fluctuating interest rates, inflation, and economic downturns
can affect the profitability and stability of banks.
FUTURE ASPECTS OF BANKING INDUSTRY

1. Digital Transformation: Banks are increasingly moving online, with mobile banking,
digital wallets, and online services becoming the norm. This makes banking more
accessible and convenient for customers.
2. Artificial Intelligence (AI):AI is being used to improve customer service through
chatbots and personalized banking experiences. It can also help in detecting fraud
and making better financial decisions.
3. Blockchain and Cryptocurrency: Blockchain technology is being explored for secure
and transparent transactions. Cryptocurrencies, like Bitcoin, are gaining attention,
though their full integration into traditional banking is still developing.
4. Cybersecurity: As digital banking grows, so does the importance of strong
cybersecurity measures to protect customer data and prevent fraud.
Thank you