Tackling Panic Withdrawals: Some Lessons | Pramod Paliwal & Pratima Harigunani

The competition in banking industry, like many others, is changing fundamentally. Banks are susceptible to systemic and non-systemic banking crisis. The evolution of a banking crisis may be attributed to many factorsdistress, panic and apprehensions being one major reason. The phenomenon of panic withdrawals has deep roots. However, if the impact of distress or panic due to rumor is only on selected banks, then this may be an insinuation towards a more serious problem. The focus in such events shifts from a healthy competition to that one of stooping to contriving in vitiating the reputation and image of the competitors. But the banks must gear up to tackle such prospective situations. Solutions fortunately can be devised for combating such a crisis. Credibility is the Achilles? heel of a banking organization-especially apropos the vacillations of a trenchant competitive sector. Unless, a comprehensive set of measures- both preemptory and peremptory- are undertaken with special advertence to the tenets of crisis management, fiascos cannot be eschewed. Here, the arsenal of logistics, communication and technology have a critical and salutary role so that combating panic withdrawals is more of a duck soup and not an asphyxiating bolt from blue.