Globalisation and liberalisation of the Indian economy, and the interest of foreign banks to expand their presence in India through the inorganic route, have fuelled the growth of the banking industry. India has a well-balanced mix of public and private sector banks. While public sector banks provide stability to the banking system in the country, private sector banks add the necessary dynamism to it.

The banking system in India is dominated by Scheduled Commercial Banks (SCBs) with a pan-India presence. As of March 2009, SCBs controlled most of the assets, with the rest being controlled by a large number of small co-operative credit institutions with a very limited geographic reach.

Within SCBs, public sector banks accounted for 71.9 per cent of the assets and the rest was held by foreign banks and private sector banks.

With an increasingly global footprint, the Indian banking industry has adopted certain global best practices such as International Financial Reporting Standards (IFRS) and Basel II. As of March 31, 2009, all commercial banks in India, excluding RRBs and local area banks, have become Basel II compliant.

India has now entered the era of online banking, e-commerce and m-commerce, which makes banking simple. Also, the use of ATMs and credit cards has increased tremendously in the last few years. There has been a major change in the products offered by banks, from a few standard credit and deposit products to a number of customised offerings to suit the requirements of various categories of customers. Also, with a network of around 70,000 branches, of which around 46,000 are in rural and semi-urban areas, microfinance has emerged as one of the most promising areas for commercial banks.

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