Assistant Professor,
Financial Institutions (FIs) and Development financial Institutions (DFIs) are playing a significant role since independence towards the economic development of India as a whole. These FIs & DFIs were the main source for long and short term financial needs for individuals and the business houses. Financial Institutions like LIC, UTI, SBI etc. were working towards fulfilling the basic financial needs like insuring the people, providing them avenues towards mode of investment, creating the habit of inculcating savings by opening the branches in their locality or vicinity. Whereas the development banks were responsible for providing long term investment basically for more then 20 years. These developments banks apart from providing credit facilities, they also provide advisory services towards the setting of the business.
After liberalization and deregulation of financial sector, the differences between commercial banking and investment banking were blurring. Foreign Investors starts investing in various sectors through the “Foreign direct Investment” mode. Apart from FDI, the latest technical know how and the latest business model or various innovative ways of doing banking activities were also making the way in the Indian market. These innovative ways of doing business were adopted by many private banks. They were providing all the financial needs under single umbrella. They had started attracting customers in great numbers.
After independence government had established so many financial Institution and the developments banks. These organizations were working independently as their line of working clearly demarcates their path. After liberalization these public banks felt the needs for overall changes so as to compete in the global market as well as with the private banks. So one innovative model was thought to be adopted for Indian Banking System where all possible combination can be utilized to benefit the customers as well as the banks. This new possible combination we call it as Universal Banking. This paper will focus on the meaning, various committee reports, and RBI guidelines towards conversion of Financial Institutions into universal banking, merits and demerits as well as feasibility of universal banking in the Indian context.
