Introduction Developed and developing economies depend on banking sector for all the financial transactions, be it government or corporate or even citizen. Banking sectors of many developing countries was recently liberalised. One such country is India. The Indian liberalisation took place due to the ineffectiveness of the banking sector. The liberalisation leads to cut throat competition. Post liberalisation major players from the banking sectors of developed economies also extended their geographical boundaries towards India. India with a good population and the massive development results in a good opportunity. In order to compete and survive in this competition there is a need of good foundation of customers who are loyal to the bank. This group of customers can be gained through retention programs. Customer retention in Indian banking sector is proving vital with time. There are recent problems like the financial recession, where the banks can rely only on these customers. Many banks in the Indian sector have already experienced the importance of customer retention and are improving in the customer retention activities by increased investments. The most important factor of any firm is the customer. Without customers, a firm cannot do business, as they are the end users of the products. Peter Drucker in his book ‘The Practice of Management ‘ has stated that, ‘the customer is the force who decides the business, the production, and the profitability of the firm (Parasuraman et al., 2006) In today’s world customers are not just local but they are global, companies in this era do not just concentrate on the local or host country markets but also the cross border business. This revolution is due to the massive development in the field of communication, technologies, privatisation and deregulations in the economies. This has not just expanded the markets but also has increased the competition. The competition is intense even for the survival, and this can be met up by only having good customer relationship. The work does not stop at acquiring customers. The real efforts starts after the customer has been acquired, i t is crucial for a company to offer them unique products and maintain a friendly relationship and proper communication channel with the customers in order to make sure that the business is not lost. Businesses use the tool of CRM (Customer Relationship Management) to retain their customers in today’s business. CRM is a process in which companies identify its profitable customers and then shapes its interaction with the customers in a way that increases the current and future prospective of business. (Bejou et al., 2006) This sector is facing rapid changes as a result of the economic reform brought about by the Government of India a decade ago (Kamath et al., 2003) This reform is a result of inefficient way of working in the banking systems (Turner and Arun, 2003).As a result of this everything in relation to banking is changing, right from the ownership pat terns, the funding its cost and availability to the prospects of earning. There is a big change in the type of services offered. The change in the interest rates has also fluctuating, as there is a reduction in the spread of the currency, security and loans (Kamath et al., 2003).The reform programs also includes the implementation of a prudential approach to bank regulation, which focuses on minimum capital adequacy requirements and supervisory control via on-site and offsite monitoring (Turner and Arun, 2003). Apart from all these the banking regulators in India are struggling not because of the slow failure of Indian banks but also due to the rapid growth of the sector. As there is a rapid growth in the Indian banks lending pat tern. Apart from this there is a continued increase in the consumer credit card sector. The growth of the Indian companies, their expansion and overseas acquisition is resulting in the rapid growth of corporate banking. The next sect ion is the investment banking which is also increasing at a higher pace. These things are resulting in more and more demand for banking products. Banks like ICICI has been growing at very rapid face. Its profit growth in the year ended March 2007 is 22% (Bukoveczky, 2007). There is massive change in this sector in regards to the development caused due to the change or advancement of technology, which has also erased the traditional boundaries of banking and also increased the business geographically. Not only the companies but also the governments are seeking better banking services for their organisational efficiency. In spite of al l the most profitable and the major business for these banks are the Indian consumers. The change in the income levels and the cultural change, in regards to westernised lifestyle are increasing day by day. Indian consumers seek more and more finance and are generate more asset creation. This has lead to massive growth in the Indian retail-banking sector. The backbone to serve all these segment of customers is a strong back up of technologies. This offers the bank convenience in managing the retail, corporate and government clients efficiently and effectively (Kamath et al., 2003). In some Indian commercial banks like ICICI, Bank of India the stress is more on relationship building with the existing customers. Bank of India advertises as their main mission is to build relationship beyond banking (Bank of India, 2003). Thus in this excessive competition in the banking sector is seen increasing day by day with the advent of various foreign banks like the Duetche, Barclays have brought about a revolution in the customer service, since then not only creation of customer but also retention of customer through customer relationship models have taken pace (Sureshchander, Rajendran and Anantharaman, 2003) Customer retention is a structure of act ions carried out by a firm to augment their process, depending upon the positive position of the customers that result in success through customer purchase. Another definition for customer retentions stresses more on the firm’s commitment in case of customer retention. The companies’ processes should enhance, the constructive outline to shape the behaviour of the customers with the existing pat terns keeping the future objectives of the customers mind set of business with the firm. This is to establish the future relationship with the customer. The banking growth became the heart of the economical growth in India (Prasad, Bhide and Ghosh, 2002).These reform brought a massive growth in this sector and also increased the competition by two fold, this has also brought about a huge pressure to the Indian banking sector (Pauchant and Roux-Dufort, 1993). Bibliography Bank of India (2003) Bank of India, 1 December, [Online], Available:HYPERLINK “http://www.bankofindia.com/”http://www.bankofindia.com/ [12 April 2011]. Bejou, D., Ramaseshan, B., Jain, S.C., Mason, C. and Pancras, J. (2006) ‘Issues and Perspective in Global Customer Relation Management’, Journal of Service Research, vol. 9, no. 2, pp. 195-207. Bukoveczky, E. (2007) Banking on India’s Continued Growth (IBN), Regioanl Business News. Kamath, K.V., Kohli, S.S., Shenoy, P.S., Kumar, R., Naik, R.M., Kuppuwamy, P.T. and Ravichandran, N. (2003) ‘Indian Banking Sector: Challenges and Oppurtunities’, COLLOQUIUM, vol. 28, no. 3. 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