Banking Sector Reforms in India Article shared by:
November 20, Last Updated: November 21, The financial sector reforms are one of the most important policy agenda of the authorities around the world. There are several reasons for the same. Firstly, the reforms are needed to increase the efficiency of financial resource mobilizations and generate higher levels of growth.
Secondly, financial sector reforms are utmost necessary for the macro-economic stability. India saw its worst economic crisis in the decade of s. InIndia embarked into an era of Economic Reforms which led to liberalization, privatization and globalization of the Indian Economy.
The financial sector reforms were an integral part to these reforms. Importance of year Prior toIndia was more or less an isolated economy, loosely integrated with the economy of rest of the world. The public sector was born out of a planned economy model, which was underpinned by a Nehruvian-Fabian socialist philosophy.
InIndia embarked on the path of liberalization, privatization and globalization. This injected new energy into the slow growing Indian Economy.
On the basis of these recommendations, the government launched a comprehensive financial sector liberalization programme which included interest rates liberalization, reduction of reserved rations, reduced government control in banking operations and establishment of a market regulatory framework.
Another outcome of liberalization was the dismantling of prohibitions against foreign direct investment. FEMA enabled the development and maintenance of the Indian foreign exchange markets and facilitated external trade and payments The NSE National Stock Exchange began its operations in RBI began the practice of auctioning Treasury Bills spanning 14 days and 28 days Capital index bonds were introduced in India for the first time.
The growth of industries and expansion of economic operations also revitalized banking operations, which had to keep up with the demand for various banking operations by the flourishing and even nascent enterprises.
Bankers also responded to the renewed demand from the industrial sector and regular customers. New technology and customer-friendly measures were adopted by bankers to attract and retain customers.
The Banking Ombudsman was established, so that consumers could have a forum to address their grievances against banks and the services they provided.Banking Sector Reforms in India *Manoj Kumar Assistant Professor, Deptt.
of Commerce, plombier-nemours.com (PG) College, Hansi ABSTRACT Banking sector reforms were introduced to remove the deficiencies in banking sector.
In the context of economic liberalisation and growing trend towards globalisation (external liberalisation), various banking sector reforms have been introduced in India to improve the operation efficiency and upgrade the health and financial soundness of banks so that Indian banks can meet internationally accepted standards of performance.
RBI has placed eleven public sector banks – Dena Bank, Central Bank of India, Bank of Maharashtra, UCO Bank, IDBI Bank, Oriental Bank of Commerce, Indian Overseas Bank, Corporation Bank, Bank of India, Allahabad Bank and United Bank of India under the PCA framework.
In the name of structural reforms, the Government of India has been allowing the entry of private sector banks and foreign banks. However, the licensing requirements of the RBI suggest that these private bankers would open branches in the rural areas too, after a moratorium period of three years.
overwhelming majority of banking activity in India. The Indian banking sector has historically suﬀered from high intermediation costs, due in no small part to the staﬃng at public sector banks: as of March , there were crores of deposits per employee in nationalized banks, compared to crores per employee in private sector banks.
Banking Sector Reforms in India *Manoj Kumar Assistant Professor, Deptt. of Commerce, plombier-nemours.com (PG) College, Hansi ABSTRACT Banking sector reforms were .