Necessity is the Mother of Implementation
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Banks in India were a late entrant to the core banking wave, but have mostly caught up to the rest of the world. The advent of private banks, due to liberalization, increased the competition and forced many Public Sector Unit (PSU) banks to upgrade their legacy systems to support and service customers effectively. State Bank of Patiala was one of the first PSUs to function fully on a computerized infrastructure in 2005. Since 2005, a lot of PSUs such as State Bank of India and associates, Andhra Bank, Corporation Bank, Indian Bank, Oriental Bank of Commerce, Punjab National Bank, Syndicate Bank, Vijaya Bank and Union Bank of India have completed 100% core banking implementation. However, as of October 2009, there are still a number of PSUs like Allahabad Bank, Central Bank of India, Canara Bank, Dena Bank, UCO Bank, United Bank of India etc. who have not implemented core banking completely. There has been no deadline set by the Reserve Bank of India. However, the incentive to implement full computerization and core banking system has surprisingly come through an external necessity, namely the unique identification number (UID) scheme that is to be launched in 2010 across the country by the Government of India. With the scheme, the Government of India is planning to issue over 600 million UIDs over 5 years and the PSU banks have been nominated as sub-registrars for issuing the UIDs. And only core banking compliant banks are eligible for UID, which will help banks to leverage this to attract unbanked populations in the rural regions. The financial inclusion will be a major area of focus for all the banks in the years to come and the necessity to be a part of the UID scheme has forced the laggard banks to implement their core banking systems by mid 2010, when the Government of India launches the pilot phase of issuing UIDs. With the informal deadline soon approaching, will the banks be able to meet it? The banks will nevertheless be pushing hard to ensure that they become a part of the process, lest they want to miss a good opportunity to grow.