Mona Sinha

Banking in India: Role of Self-Service Technologies

India evolved into an emerging economy based on its economic growth for the last two decades and its demographic dividend. India resiliently weathered the global financial crisis by growing at an average rate of 6% to 9% during 2007-2010 as compared to its erstwhile traditional growth rate of 2.5%1(Tata Statistical Outline of India 2008-2009, 2009-10. Economic, social and demographic metamorphoses dramatically altered the competitive landscape of Indian businesses. The banking sector which was critical for bridging the large rural-urban divide and achieving India’s financial inclusion goals, also transformed significantly. Yet even though income levels were rising and 81% of households saved, 36% kept their savings at home as cash (The Marketing Whitebook 2009-2010). About 48% of urban and 62% of rural Indians did not even have a bank account (Naik 2008). As regulatory restrictions eased, multinationals and the Indian private sector rapidly entered the market, increasing competitive pressure on the public sector (i.e., government owned) banks that had hitherto operated more for achieving government mandated financial inclusion goals than for profit. By 2009, India had 27 government banks with 85.8% of the branches and 77% of deposits; 21 private sector banks with 13.7% of the branches and 18% of deposits; and 30 multinational banks with 0.5% of branches and 5.2% of deposits (www.rbi.org.in).