Indian banking sector is going great guns. The sector was one of the foremost contributors to help the country to overcome the global economic recession. But the question arises whether the banking sector is just a sector of financial activities or has helped the country to achieve inclusive growth.
India’s GDP could achieve 8.5% growth rate in the current financial year, after dipping during the recession period. Hence, growth is not a worry for the country, but for inclusive growth, the country has to go a long way. There are two factors, supply and demand side factors driving Inclusive Growth. Banks and other financial services players largely are expected to mitigate the supply side processes that prevent poor and disadvantaged social groups from gaining access to the financial system. The financial stability, economic stability and inclusive growth with stability, it is not possible without achieving financial Inclusion. But, the empirical evidence shows that countries with large proportion of population excluded from the formal financial system also show higher poverty ratios and higher inequality. Thus, financial inclusion is no longer a policy choice but is a policy compulsion today. The task is of gigantic nature as the number of financially excluded people, in the country is much large.
Another big challenge to the banking sector is to provide fool-proof service to its customers. The reports of frauds associated with banking sector raise a question whether banks are secured places for one’s money? Reports of fraudulent withdrawal of one’s hard earned money in online transaction or from ATM machines were not new. But Rs. 400 crore fraud in a Citibank branch in Gurgaon, where a relationship manager allegedly lured rich clients to invest in fraudulent schemes that promised high returns supposedly backed by the bank, has raised serious question about safety of one’s money in banks.
