Banking is a Very Good business if you don’t do anything dumb – Warren Buffett
A Bank is a financial institution which accepts Deposits and lend the money.
The bank plays a very important role in the financial system as it is critical to decide the cost of funds. Recently I was reading a report about how giving permission to open a bank account to the Rural part or any other part of the economy, developers, and helping the whole economy.
I don’t know whether it is right or wrong, but I feel that For running the Bank, you need the right man at the right time and right place. You may find many examples in the industry itself. From Deepak Parekh, P J Nayak to Shikha Sharma, Uday KOTAK. It is the management who decided the future by its decision. It is the management or the employees who are working in the Bank are the biggest asset for many banks.
The banking industry is different from other industries. No other industries come into direct contact with the general public. Banking is the business where the Raw material and Final product are the Same. Money. The assets in banking are far different from other businesses. No other business is as important as banking in the Economy. That is why they called it the equivalent of the economy. Many times the health of the economy is analyzed from the health of Banking. As Banking comes into contact with the general public and Industrial customer, it is important for Govt also. No other businesses hold this level of importance. Naturally, it attracts the highest amount of regulation.
Banking is a Good industry where you can earn money. But for that, you need to do the right things. The reason is Banking is not Manufacturing where you buy Raw material and process it and then manufacture something else. Banking is simply the process to earn money from the money you have. If you do it right, you are the winner. The most important thing in this is pretty simple. Make successful Formula and keep repeating it until you succeed. In the language of Saurabh Mukherjee, Ambit Capital, The word that is repeatedly mentioned in the context of HDFCBANK is execution. For Axis Bank, you may realize that it is Consumer satisfaction and Technology.
As India is emerging economy, the healthy banking is more and more important for Indian economy.
Running a bank is as difficult as analyzing BANK and its Fundamentals. Many Small, Check and Uncheck, many small things, Many parameters to check. But there is the reason for that as Bank business comes into contact with Public money which makes it important role player in Country’s economy. If handled by the wrong person, you are inviting disaster. For running the Bank, Management and the way they run it is important. The parent Institution is also important for banks as it’s possible for them it’s possible to use the brand name or develop one. If they are strong, the bank will eventually follow it.
