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Banks and Financial Institutions (FI) are in the business of financial intermediation i.e., channelizing investible financial resources to investment opportunities. Banks and FIs create Liabilities and Assets in their operations. The liabilities and assets, though in the books of the FI, are subject to influence by prevailing markets conditions and regulatory norms. Thus, optimum mix of Liabilities and Assets in the portfolio of Banks / FIs is required to ensure their survival and growth. The economic environment is subject to various external economic and non-economic forces beyond the control of the individual institution. The changed economic environment leads to unforeseen impact on the institutions. This paper evaluates performance of Indian Banking System during the Global Economic Crisis with that of select global markets. The paper also focuses on the change required in business and operational strategy by Banks and FIs in during economic slowdown i.e., re-strategizing in economic slowdown for converting adverse economic environment into a favourable business and operational opportunities.
Smita Shukla (Wed,) studied this question.