An Assessment of Bangladeshi & Indian Commercial Banks Trend towards Universal Banking

JEL Classification: G20, G 21, G28. With the start of deregulation in early 1990s in various parts of the world along with other types of changes in the banking rules and regulations (i.e. relaxing of Glass-Steagall Act 1933 in USA, Financial System Reform Act 1993 in Japan etc.) during the same period, most banks in Europe, USA and Japan as well as in developing world have tried to pursue the policy of universal banking system. Even though there has been growing number of academic literatures highlighting its pitfalls (i.e. universal banking trend reduces the specialization, increases risk exposure, increases cost structure etc.) still this trend continues to grow till to date to accommodate every single customer vis-à-vis every single business opportunities. The financial sector reform program both in Bangladesh and in India in 1990s has also provided the same platform to the banking industry of respective country. However, even after more than two decades no significant academic maneuver has been undertaken to study the extent to which universal banking trend flourished in Bangladesh and in India. Therefore, with a sample of 60 commercial banks this paper aims as exploring the status of commercial banking activities in their trend towards universal banking practices in the respective countries. The result highlights that, there are significant difference between the status of Bangladeshi and Indian commercial banks trend toward universal banking, with the latter one clearly ahead of the earlier.