The financial sector, especially the banking industry in many emerging economies, including India, is undergoing a transformation process. . By building a sound financial system the banking industry can bring stability to the financial markets.Reducing regulations in the financial sector has boosted product range in the developed market. Some of the new products introduced are credit cards, real estate, exits and various non-balance sheet items. The new vistas have therefore created more banking resources to generate higher profits than traditional financial mediation. At the same time they are opening up new dangerous areas. Over the past decade, the Indian banking industry has continued to respond to emerging competition challenges, risks and uncertainties.