Despite banks having 89,000 branches, 55,000 automated teller machines, or ATMs, and over half a million points of sale in the country, more than half of India's 1.2 billion population lacks access to banking services. Technology enabled meaningful financial inclusion would mean gigantic business opportunities for existing as well as new players in banking.
There are currently over 850 million mobile phone connections in India. While banking transactions using mobiles have already begun, with a number of players in the fray, the opportunities are limitless. Handheld devices can do much more than just move money.
Consolidation Among Public Sector Banks
With the government gradually paring down its ownership in PSU banks and finance being directed towards productive uses, the longterm survival of undercapitalised PSU banks will depend on consolidation. With rising fiscal deficit, the chances of further capital infusion to keep weak banks afloat are low.
Impact of Savings Account Deregulation
With the removal of the four per cent interest cap on savings accounts above Rs 1 lakh, banks will have to be more attentive to customers. Now banks will fight over liabilities (deposits), just as they traditionally fought over assets (loan books).
Vibrant Corporate Debt Markets
Such markets, a long pending need, are likely to become a reality. They will draw large and midsized borrowers away from banks, leaving the latter free to focus on small and medium enterprises, apart from drawing millions of the stillunbanked into the banking net. The dependence of banks on wholesale banking will reduce.