Banking Sector

Reforms

Weak public sector banks were recapitalised through
budgetary support.
Some banks have strengthen their capital base through
public issue of shares.
Legal amendments have been made to induct private
participation in the Board of Directors.
Private sector banks have been established.
Local Area banks have been licensed to instill a greater
element of competition in the financial system.
More liberal policy of permitting branches of foreign
banks in India is being followed.
Interest rates both on deposit and lending side have been
deregulated.
Prudential norms for income recognition, asset
classification, provisioning and capital adequacy have
been strictly enforced to achieve international standards.
SLR reduced from 37.5% to 25% and CRR has been
reduced from 25% to less than 10%. (currently CRR is
6%)
The determination of foreign exchange rate is left to
market conditions.