Core of Banking Remains Trust
Banking survives on capital, but it thrives on trust and trust is built by true leadership, not authority.
Anil Kumar Sharma
Last week, we had news of a suspected fraud at the Chandigarh branch of IDFC First Bank. Such incidents, even when isolated, shake the confidence of common people. Banking runs not merely on capital and compliance; it runs on trust. The moment trust trembles, the foundation of the system feels vulnerable.
India’s banking journey has travelled through many phases. In the early years after Independence, banking was largely controlled by private business houses. Credit was concentrated in cities, and rural India remained neglected. To address this imbalance, major banks were nationalised in 1969 and again in 1980. The objective was clear banking must serve national development.
Public sector banks expanded into villages, financed agriculture, supported small industries, and carried the dream of financial inclusion to remote corners of the country. For decades, they were not merely institutions of finance but instruments of social transformation.
The economic reforms of 1991 marked a turning point. Liberalisation introduced competition, prudential norms, and new private sector banks equipped with modern technology and professional management. Institutions such as HDFC Bank, ICICI Bank, and Axis Bank redefined customer expectations. Speed, efficiency, digital platforms, and customer centric service became benchmarks.
Competition improved efficiency across the sector, but it also exposed weaknesses within public sector banks. Years of directed lending, infrastructure exposure, and policy driven credit resulted in rising stressed assets. Capital adequacy became a concern. The government had to step in with recapitalisation and later consolidation to strengthen balance sheets and sustain credit growth.
Mergers were undertaken to create larger and more resilient entities capable of funding infrastructure and supporting large corporate credit essential for economic expansion. While consolidation aimed at stability, it also brought emotional and operational challenges for employees adjusting to new structures.
At the same time, the private sector too faced turbulence. The collapse of certain private banks in different phases of Indian banking history reminds us that governance lapses and aggressive risk taking can destabilise any institution, irrespective of ownership. Stability depends not merely on being public or private, but on discipline, transparency, and ethical conduct.
Today, public sector banks operate under a dual expectation. Stakeholders demand service standards at par with private banks — seamless digital experience, quick credit decisions, and professional engagement. Simultaneously, these banks are entrusted with implementing government initiatives such as Jan Dhan accounts, direct benefit transfers, Mudra loans, and other welfare schemes aimed at empowering the common citizen.
Public sector banks carry the burden and honour of financial inclusion. They open accounts in the most remote areas, ensure subsidy transfers, finance priority sectors, and stand as the backbone of welfare delivery. This responsibility strengthens social equity but also increases operational pressure.
Employees often find themselves in a paradox. They are expected to perform with the polish of private banks while working within strict regulatory and administrative frameworks. Compliance requirements are heavy. Accountability is stringent. Decision making is cautious due to fear of post scrutiny.
There was a time when public sector banks were regarded as among the finest institutions to serve in respected, stable, and driven by purpose. Over the years, excessive control, limited operational freedom, and constant vigilance pressures have affected morale.
Emerging threats in Indian banking include digital frauds, cybersecurity risks, fintech competition, global economic uncertainties, and climate related financial exposures. Yet opportunities are equally significant. Expansion of infrastructure, growth of MSMEs, green financing, and digital public infrastructure can accelerate India’s economic ambitions.
However, growth alone is not sufficient. The core of banking remains trust.
When incidents like suspected frauds surface, they remind us that systems must be strengthened not only technologically but morally. Governance must be proactive, not reactive. Oversight must be firm, but leadership must be fair.
The future of Indian banking depends on balance between commercial performance and social responsibility, between regulation and operational
freedom, between ambition and accountability.
Above all, it depends on leadership.
True leaders are the necessity to run these institutions, not bosses who dictate their whims and create a toxic culture. Institutions flourish under guidance, not fear. Banking once stood proudly as a noble profession serving the masses with dignity. It can regain that stature only when leadership inspires trust, protects honest decision making, and nurtures its people.
Banking survives on capital, but it thrives on trust and trust is built by true leadership, not authority.
(STRAIGHT TALK COMMUNICATIONS EXCLUSIVE)
