REFORMS IN BANKING

SECTOR

GROUP MEMBERS

DEEPAK
CHANDAN
SIDDHANT
ALI ASGAR
PRADAMAN
What is banking?
“ Bank is an institution which trades in money,
an establishment for the deposits,custody
and issue of money,as also for making loans
and discounts and facilitating the
transmission of remittances from one place to
another”.
Types of bank in India
 Commercial Banks
 Industrial Banks

 Agricultural Banks

 Exchange Banks

 Central Banks

 Indigenous Bankers
Main reforms in banking sector
 Government equity in banks has been
reduced and strong banks have been allowed
to access the capital market raising additional
capital.
 Bank now enjoying the operational freedom
in terms of opening of new branches and
bank having good track record of profitability
given flexibility in recruitment.
Main reforms in banking sector
 New private sector banks have been set up
and foreign banks are allowed to expend their
function in India including through
subsideries.
 Banks are also allowed to set up off shore
banking units in SEZ.
 new instrument have been introduced for
better flexibility and better risk management
like interest rate exchange, cross currency
forward contract.
Main reforms in banking sector
 New areas open like-:
 Insurance

 Credit card

 Infrastructure financing

 Gold banking

 Investment banking
Main reforms in banking sector
 Several new institution have been set up-:
 National securities depositor limited
 Central depositors service limited
 Credit information bureau India limited

 Limits for overseas investment have been

liberalized.
 The overseas investment for corporate have
been raised to hundred percent
Main reforms in banking sector
 Universal banking has been introduced.
 Adoption of global standard-:

 Prudential norms for capital adequacy,

Assets classification , income recognization,
best accounting system, settlement system
are adopted
 Competition enhancing
measures

 Freedom in operation
 Disinvestment of public ownership in public
sector bank
 Transparent norms for private and foreign bank

 Permission for FDI and portfolio investment in

banking
Measures enhancing the role
of market forces
 Interest
rate on domestic term has been
deregulated
 Reduced pre-emption.

 Enhanced transparency and disclosure.

Instutional and legal measure

 Strengthening of credit information and

creditors right.
 Passed the recovery of debt act in 1993 to
facilitate and speed up .
 Six special tribunals have been set up And
appellate Tribunal has also been set up in
mumbai.
 Improved framework for payment and
settlement.
Techenological Related measures

 Dedicated communication as bakbone for

banks.
 Introduction of product through
communication network.
 Electronic funds transfer .

 Centralised banking or core banking .

 Structured financial messaging solution.

Measure in Interest rates slab
 Prime landing rate of SBI and other banks of
over Rs 2 lakhs has been reduced .
 Rate of interest on bank loans above Rs 2
lakhs has been fully decontrolled .
 The interest rates on deposits and on
advance of all co-operative bank have been
deregulated.
 Interest rate on domestic term deposits has
been decontrolled .
Supervisory measures

 Setting up an autonomous body for supervision

provision
 Introduction of off-site surveillance

 Monitoring systematically, important financial

institutions
Thank you