A REVIEW ON INDIAN BANKING SECTOR

Recession is an economic phenomenon of decline in macro economic factors of demand for goods and services, production levels, research and development budgets, marketing promotions and so on. Recessions are the result of reduction in the demand of products in the global market. Recession can also be associated with falling prices known as deflation due to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growtfi m the west. Global economic meltdown has affected almost all countries in the world. Strongest of American, European and Japanese companies are facing severe crisis of liquidity and credit. India's cautious approach towards reforms has saved it from possibly disastrous implications. The truth is Indian economy is also facing a kind of slowdown. The prime reason being, world trade does not functions in isolation. All the economies are interlinked to each other and any major fluctuation in trade balance and economic conditions causes numerous problems for all other economies. Subprime borrowers in the US trigger a global financial crisis that results in liquidity getting light, demand conditions weaken, price of commodities crash, employees and consumers panic. This is because of recession or economic slowdown in the world. This paper looks into the aspects of recession and its impact on banking sector in India. Financial markets create an environment that helps people trade money for financial assets such as equity shares or commodities like gold or other precious metals. There are different players in the market who take charge of matching capital supply and demand. Investors, both individual and institutional, provide capital to the market in anticipation of returns as promised by the borrowers or users of capital. Banks and other financial intermediaries facilitate the movement of capital between lenders and borrowers. Securities market consists of various financial institutions that collectively support the issuance and trading of securities. These are various channels that create assets pools such as mutual funds and pension funds. Financial markets facilitate allocation of resources over time through a price mechanism such as interest rate, which is affected by forces of supply and demand. In market economies, the interactions between buyers and sellers determine the demand for and supply of resources. Thus the allocation of resources is determined by market forces. Finally, the paper presents findings of a study of 3 different financial institutions in India with respect to what approach they have followed to face the recession and the strategies initiated. A conclusion is drawn at the end in terms of how banking companies have shown an inclination to face the economic decline and march towards the future.