Globalization of Banking Systems

Globalization of Banking Systems- The market for financial services and products is global dynamic. The growth of international banking has however been restricted to Euro currency and off-shore banking centers because of protectionist financial policies, restrictions on banking practices and unpromising financial environment. The worst causality of banking protectionism is efficiency and service. Banks want protection from competition while striving for a free hand abroad. This policy cannot be pursued indefinitely, because several governments insist on reciprocity in opening branches. Restrictions would be down internationalization of banking system. Since banks abroad are relatively free of restriction, close regulation of banks in the past in France and Germany has stifled their growth.

• Consolidated Supervision: While there is a uniform supervisory regime for both banks and NBFCs consisting of on-site supervision, off-site monitoring, and periodic external auditing. DFIs are loosely defined. They have to be brought under a transparent framework as suggested by RBI.

RBI requires that banks and non-banks be supervised by the board for financial supervision with the Deputy Governor as chairman. For insurance it would be the Insurance Regulatory Authority and SEBI with its regulatory jurisdiction.

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