Challenges and opportunities for Universal Banking in India.

*Jennifer Maria Quadras **Shwetha MK

ABSTRACT:
The rapid economic growth, globalization and technological advancements of the 1980s and 1990 have provided greater scope for the expansion of investment banking to several new areas and services in the USA. Due to these developments the Glass Steagall Act was replaced by the Financial Modernization Act of 1991 which removed the antiaffiliation restrictions among commercial banks, investment banks and insurance companies. This led to the growth of Universal Banks in US. In Europe most of the Universal Banks were established since the late 19th century. In India liberalization and deregulation of the financial sector promoted greater harmonization of commercial banking and investment banking giving rise to Universal Banking. RBI appointed a working group on 8th Dec 1997 under the chairmanship of Shri. S.H. Khan to bring about greater clarity in the respective roles of banks and financial institutions for greater harmonization of facilities and obligations. The Narasimham committee also suggested that DFIs should convert ultimately to either commercial banks or NBFCs. The Khan working group held the view that DFIs should be allowed to become banks at the earliest. Thus, the Indian Financial structure is slowly evolving towards Universal Banking which is likely to assume the role of a one stop financial supermarket. The first Indian Bank to show considerable interest in transforming itself into a Universal Bank was ICICI. In fact the issue of Universal Banking came into limelight in 2000, when ICICI gave a presentation to the RBI to discuss the time frame and possible options for transforming itself into a Universal Banking. This paper even focuses on SWOT analysis of Universal Banking in India.

* Lecturer, Department of PG studies in Commerce, St. Aloysius College, (Autonomous), Mangalore. E-mail:jenniferprakash@rediffmail.com **Lecturer, Department of Economics, St. Aloysius College, (Autonomous), Mangalore. E-mail:mkshwetha11@gmail.com

Thus, the Indian Financial structure is slowly evolving towards a continuum of institutions rather than discrete specialization. Universal Banking is likely to assume the role of a one stop financial supermarket.

* Lecturer, Department of PG studies in Commerce, St. Aloysius College, (Autonomous), Mangalore. E-mail:jenniferprakash@rediffmail.com **Lecturer, Department of Economics, St. Aloysius College, (Autonomous), Mangalore. E-mail:mkshwetha11@gmail.com