Technology and social control on banks has helped in achieving a high degree of financial inclusion but the contribution of banks in channelizing financial savings to productive sectors has been sub-optimal due to large public sector debt and decline in financial savings in an increasingly consumption-driven economy. Desktop analysis of the annual reports of the Reserve Bank of India shows that the institutional development in banking sector has followed a punctuated equilibrium path to develop significant endogenous capabilities in Indian banks of reforms and modernization. The banks have responded well to external stimuli and regulations but there are significant challenges at present and plenty of dark fibre to tap. Policy, regulatory and technological measures are needed to correct the risk aversion stance of banks and erosion of profitability in recent years. Institutional reengineering is needed to curb regulatory arbitrage by entities directly competing with banks in raising deposits and lending - including treasury banking through small savings schemes. Credit information systems and systems of record keeping of titles to property and charges thereon need significant improvement. Excessive regulations due to delinquency by a few are against the expectations and interests of the vast majority of compliant stakeholders. Rather blunt macro-prudential regulations need to be supplemented by fine-tuned RegTech/SupTech/FinTech enabled micro regulations and business practices to create appropriate incentives/disincentives at operational levels. Block chain technology deserves special mention to create smart contracts and verifiable transaction trails. Bank account portability is needed to spur competition. Banks need to get disentangled from long-term project finance to refocus on short and medium term credit. Formalisation requires ease of doing business, nay ease of living. Technology-enabled efficient services and white label business correspondents are needed to ease the access and reduce the cost of adoption of formal financial services