Emerging Challenges for Indian Banking Industry in the backdrop of Global Financial Crisis

Abstract

A spell of severe credit crunch, salary cuts, rehiring and a lot of news on loans going bad, lead this research paper to test the hypothesis
that the Indian Banking Industry has been performing badly in contemporary times and was adversely impacted due to the continuing Global
Financial Crisis. The methodology adapted to analyse the performance of all the Scheduled Commercial Banks of the Indian Banking Industry
was to study the trend of the three most significant parameters/ratios applicable for Banking Industry. Among the parameters of performance, the
most significant ones comprise Net Non Performing Assets as a percentage of Net Advances, Capital Adequacy Ratio and Return on Assets. A
single composite weighted average of all Nationalised banks, Private sector banks and Foreign banks in India has been considered to view the trend
in the period 2005-06 to 2007-08. The analysis shows that the Indian Banking Industry is stable and still growing albeit at a slow pace. The
conclusion has certain learning’s for the US Banking Industry.