Indian Financial System After 1991 Case Study
Q: Briefly explain the changes happened in Indian Financial System after 1991 and also describe the impact on financial services.
A: The year 1991 itself is very important for Indian history as economic reforms took place in this year. Reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment were some important features of the economic reform.
The economic reform process that took place in 1991, happened to resolve two crises:
1) the balance of payments crisis that threatened the international credibility of the country and pushed it to the extremity of default and
2) the threat of insolvency of the banking system of India.
This step was initiated by PV Narasimha Rao(Prime Minister-1991) and …show more content…
To adopt and implement the world class technology the investment in R & D department has to increase.
Necessity for Change- Prior to 1991 business enterprises could follow stable policies for a long period of time but after 1991 the business enterprises have to modify their policies and operations from time to time.
Market Orientation- Earlier firms were following selling concept, i.e. produce first and then go to market but now companies follow marketing concept, i.e. planning production on the basis of market research, need and want of customer.
Financial sector reforms were the main motive of the economic reform that was initiated in 1991 with the goal of making the Indian economy more marketable, service-oriented and expanding the role of private and foreign investment. Financial sector reforms refer to the reforms in the banking system and capital market. Under these reforms, attempts have been made to make the Indian financial system more practical, efficient and more responsive. Financial reforms have been undertaken in all the three segments of the financial system, namely banking, capital market and Government securities …show more content…
While the importance and role of public sector banks in Indian financial system continued to be emphasised, it was however recognised that there was urgent need for introducing greater competition in the Indian money market which could lead to higher efficiency of the financial system. Accordingly, private sector banks such as HDFC, Corporation Bank, ICICI Bank, UTI Bank, IDBI Bank and some others have been set up. Establishment of these banks has made substantial contribution to housing finance, car loans and retail credit through credit card
A: The year 1991 itself is very important for Indian history as economic reforms took place in this year. Reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment were some important features of the economic reform.
The economic reform process that took place in 1991, happened to resolve two crises:
1) the balance of payments crisis that threatened the international credibility of the country and pushed it to the extremity of default and
2) the threat of insolvency of the banking system of India.
This step was initiated by PV Narasimha Rao(Prime Minister-1991) and …show more content…
To adopt and implement the world class technology the investment in R & D department has to increase.
Necessity for Change- Prior to 1991 business enterprises could follow stable policies for a long period of time but after 1991 the business enterprises have to modify their policies and operations from time to time.
Market Orientation- Earlier firms were following selling concept, i.e. produce first and then go to market but now companies follow marketing concept, i.e. planning production on the basis of market research, need and want of customer.
Financial sector reforms were the main motive of the economic reform that was initiated in 1991 with the goal of making the Indian economy more marketable, service-oriented and expanding the role of private and foreign investment. Financial sector reforms refer to the reforms in the banking system and capital market. Under these reforms, attempts have been made to make the Indian financial system more practical, efficient and more responsive. Financial reforms have been undertaken in all the three segments of the financial system, namely banking, capital market and Government securities …show more content…
While the importance and role of public sector banks in Indian financial system continued to be emphasised, it was however recognised that there was urgent need for introducing greater competition in the Indian money market which could lead to higher efficiency of the financial system. Accordingly, private sector banks such as HDFC, Corporation Bank, ICICI Bank, UTI Bank, IDBI Bank and some others have been set up. Establishment of these banks has made substantial contribution to housing finance, car loans and retail credit through credit card