The economic development depends upon a multiplicity of factors. Amongst these varied factors, the rate of capital formation is one of the most important determinants of the rate of growth of an economy. It is one of the key inputs of development.
The economic development of a country depends Inter alia, on its financial structure. In the long-run, the larger the proportion of the financial assets to real assets, the greater is the scope for economic growth. Investment is a precondition of economic growth. To sustain growth, continued investment in the growth process is necessary. Since finance is an important input in the growth process, it plays a crucial role in the economy. A more efficient composition of real wealth is obtained by the promotion of financial assets which provide incentives to savers to hold a larger part of their wealth in the financial form. An increasing rate of savings correlates with the increase in the proportion of savings held in the form of financial assets − relative to tangible assets.
In recent year’s globalization, deregulation and emerging markets have dramatically changed the way banks and financial institutions respond to evolving market dynamics. Increasing global competition has also pushed banks to continuously search for new sources of competitive advantage. Therefore today\'\'s organizations have multiple offices across multiple locations worldwide with thousands of Employees and millions of Assets to track.
Over the years, the increasing need to enhance income, improve market share, improve quality of service, adopt technology, refocus on the customer relationship and reduce cost of operation and improve profits has forced banks and other financial institution to rethink and adopt varying business strategies and models.
Key elements of strategies adopted by financial institution in India include improved management, adopt new skills, building a strong presence in India and abroad, customer focused production innovation, financial resilience and a strong operating environment, strong prudential and supervisory norms are requiring banks in India to conform to higher standards. Three key buzzwords are the current focus of the industry today.