Page 53 - Banking Finance June 2025

ARTICLE

Recent Challenges

in Indian Banking

and way forward to

Abhinav Jain
cope up with them Chief Manager-Faculty

Zlc Bhopal
Union Bank of India

With the advent of technology, banking has come way forward and modern-day banking has unique
challenges and ways to cope up with them. Here in this article we will try to discuss few challenges
of modern-day banking and ways to cope up with them.

W ith the advent of technology, banking has usage of technology in managing personal finances, so
mindset of customers, needs to be changed.
come way forward and modern-day banking
has unique challenges and ways to cope up
with them. Here in this article we will try to discuss few 2) Rising NPA'S and Unsecured credit- With great
opportunities comes great risk. With expanding
challenges of modern-day banking and ways to cope up with
businesses and growth in tier 2 and small cities, there
them. are more opportunities for banks to extend credit. But
with that comes higher risk of failures of business, which
1) Adaption of Digital Banking & Cybersecurity - With in turn increases probability of loans turning bad. While
the growth of digital banking and reliance on NPAs have reduced in some areas, high levels of bad
technology, banks must invest heavily in technology to loans continue to be a significant concern, specifically
provide secure and seamless services to customers. where there is sector specific stress or may be some
However, integrating cutting-edge technology while
loans which are not backed by collaterals. Focused
maintaining legacy systems can be difficult. Moreover,
recovery branches, assistance in reviving the businesses
as digital banking expands, the risk of cyberattacks, data
can be a key in reducing NPA's.
breaches, and fraud increases. Banks must continuously
Many of the borrowers who want to start their business
upgrade their cybersecurity measures to protect
avail collateral free loan. This type of unsecured credit
sensitive customer information and maintain trust.
Various efforts are being made by banks, financial carries a high risk and probability of default. However,
institutions and government to curb malpractices like government comes up with various coverage schemes
like CGTMSE, CGFMU for backing the risk of banks.
cyber frauds, digital arrests, still awareness and
alertness of customers will play key role in avoiding such 3) Capital Adequacy - Public sector banks, continue to face
mishaps. Apart from that, there is still some reluctance challenges related to maintaining adequate capital
in usage of technology, specifically when it comes to buffers as they expand lending. The introduction of

48 | 2025 | JUNE | BANKING FINANCE