Banking Sector

Topics: Bank, Fractional-reserve banking, Central bank Pages: 15 (5247 words) Published: April 26, 2013
Indian Streams Reserach Journal
Vol.2,Issue.I/Feb; 12pp.1-4

Muniraju M Research Papers



Kumar B Assistant Librarian, University College of Arts, Tumkur University Tumkur- 572103.

Muniraju M Assistant Professor, Department of Studies and Research in Economics, Tumkur University, Tumkur – 572 103.

The Indian banking industry is measured as a flourishing and the secure in the banking world. The country's economy growth rate by over 9 percent since last several years and that has made it regarded as the next economic power in the world. The paper deals with the banking sector reforms and it has been discussed that India's banking industry is a mixture of public, private and foreign ownerships. The major dominance of commercial banks can be easily found in Indian banking, although the co-operative and regional rural banks have little business segment. Further the paper has discussed an evaluation of banking sector reforms and economic growth of the country since from the globalization and its effects on Indian economy. Competition among financial intermediaries gradually helped the interest rates to decline. Deregulation added to it.

The real interest rate was maintained. The borrowers did not pay high price while depositors had incentives to save. It was something between the nominal rate of interest and the expected rate of inflation. Finally the paper deals with conclusion and inflation rates from the different years and regulation of economy and finance of the country through government policies and banking sector reforms. Key Words: Banking Sector, Reforms, Economy, Inflation, Growth Introduction: The efficient, dynamic and effective banking sector plays a decisive role in accelerating the rate of economic growth in any economy. In the wake of contemporary economic changes in the world economy and other domestic crises like adverse balance of payments problem, increasing fiscal deficits our country too embarked upon economic reforms (Ahulwalia M. S; 1993). The Government of India introduced economic and

financial sector reforms in 1991 and banking sector reforms were part and parcel of financial sector reforms. These were initiated in 1991 to make Indian banking sector more efficient, strong and dynamic. The recommendations of the Narishiman Commission-I in 1991 provided the blue print for the first generation reforms of the financial sector, the period 1992-97 witnessed the laying of the foundations for reforms in the banking system. This period saw the implementation of prudential norms (relating to capital adequacy, income recognition, asset classification and provisioning, exposure norms etc). The structural changes accomplished during the period provided foundation of further reforms. Against such backdrop, the Report of the Narishiman Committee- II in 1998 provided the road map of the second generation reforms processes. Y.V. Reddy noted that the first generation reforms were undertaken early in the reform cycle, and the

Please cite this Article as : bY Muniraju M AND Kumar B , BANKING SECTOR REFORMS IN INDIA: THE RATIONALE AND EFFICACY : Indian Streams Research Journal (Feb ; 2012)


Indian Streams Reserach Journal
Vol.2,Issue.I/Feb; 2012

reforms in the financial sector were initiated in a well structured, sequenced and phased manner with cautious and proper sequencing, mutually reinforcing measures; complimentarily between forms in banking sector and changes in fiscal, external and monetary policies, developing financial infrastructure and developing markets. By way of visible impact, one finds the presence of a diversified banking system. Another important aspect is that apart from the growth of banks and commercial banks there are various other financial intermediaries including mutual funds. NBFCs, primary dealers housing financing...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Banking Sector Reform in India Essay
  • Essay about Banking Sector in India today
  • Essay on Inclusive Banking
  • commercial banking sector in india Essay
  • Banking Reforms India Essay
  • Merchant Banking Essay
  • Universal Banking Essay
  • Essay about Narasimham Committee on Banking Sector Reforms

Become a StudyMode Member

Sign Up - It's Free