Until last year the mood on the street was upbeat, which saw the bulls rampaging the Sensex into 20,000-plus territory. The money was flowing freely into the market, thanks to FIIs. However, the scenario today is quite the opposite. BFSI sector is badly hit; AMCs have witnessed huge redemption pressure and erosion in their AUM. Banks too have been on the receiving end of the financial turmoil that started from US sub-prime crisis.
Banks are lurking under the fear that their Non-performing assets would go up as their portfolios come under severe stress. Portfolio management would be a big challenge as underlying assets deflate. NPA norms have seen no easing. Regulation andcompliance requirement are bound to get stringent. Today new customers are hard to get, exploring new channels is costly and risky and launching a new product could be drain on banks resources. Banks therefore, need to focus on identifying revenue opportunities in existing customers, channels and products and channelize spending on products and channels based on profitability. These and several other factors have made banking in the current recessionary scenario an extremely difficult task. |
