Dr. Krishan Bir Singh: Impact Factor 5.901 (Sjif)

International Double Blind Peer Peviewed,Refereed,Indexed Research Journal,ISSN(Print)-0974-2832,E-ISSN-2320-5474,RNI-RAJBIL-2009/29954,Impact Factor-5.
901(SJIF),Sept-2020
International Indexed, Peer Reviewed & Refereed Research Journal Related to Higher Education For all Subject
SEPT, 2020 IMPACT FACTOR 5.901 (SJIF)
ISSN 0974-2832 (Print), E-ISSN- 2320-5474,RNI RAJBIL 2009/29954
Editor in Chief
Dr. Krishan Bir Singh
www.ugcjournal.com
SHODH SAMIKSHA AUR MULYANKAN 1
Impact Factor : 5.901(SJIF) RNI : RAJBIL2009/29954
International Double Blind Peer Peviewed,Refereed,Indexed Research Journal,ISSN(Print)-0974-2832,E-ISSN-2320-5474,RNI-RAJBIL-2009/29954,Impact Factor-5.901(SJIF),Sept-2020
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Contact - 094 139 70 222

094 600 700 95
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professor.kbsingh@gmail.Com
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2 SHODH SAMIKSHA AUR MULYANKAN

EDITORIAL BOARD
Christo Ananth
Patron
Gopinath Palai
Prof. Kala Nath Shastri
Dr. Neeta Gupta
(Rashtrapati Puraskar” For His Contribution To
Dr. Vinita Shukla
Sanskrit)
Harold Jan R. Terano
Prof. Dr. Alireza Heidari
Dr Sajid Mahmood
Full Professor And Academic Tenure, USA
Dr Pavan Mishra
Chief Editor
Editor
Dr.H.B.Rathod
Dr. Krishan Bir Singh
Dr.Naveen Gautam
Dr. Mohini Mehrotra
International Advisory Board
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Aaeid M. S. Ayoub
Dr. Suresh Singh Rathore
Geotechnical Environmental Engineering
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Uqbah bin Muhammad Iqbal
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Shameemul Haque
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Associate Chief Editor
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Ravindrajeet Kaur Arora
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Dr. Rajeev Nayan Singh

Dr. Ranjana Rawat
Dr. Pankaj Rathore
Sonia Rathi
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Dr.Anand Kumar
Pradip Kumar Mukhopadhyay
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Anil Kumar
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Research Paper Reviewer Dr Ade Santosh Ramchandra
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Dr Dheeraj Negi
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Chief Advisory Board
Ashok Kumar Nagarajan
Advisory Board
Dr. Naveen Kumar
Manoj Singh Shekhawat
Pranit Maruti Patil
Vishnu Narayan Mishra

Research Paper - Commerce
Financial Sector Reforms And The Performance
Analysis Of Banks In India Since 1991
*Dr.Govind Bhushan
*(PGT),Govt. G.N. H/S Chandanpatti Muzaffarpur
A B S T R A C T
In 1991 a Committee on Financial System (CFS) was set up to recommend for
bringing about the necessary reforms in the financial sector. This committee was also known as “Narasimham
Committee”. CFS appraised and acknowledged the success and progress of Indian banks. It is notable
that the major banks were nationalized on 19 July 1969, but the positive effects were showed only in the
field of expansion and spread of bank branches, creation of employment and mobilization of savings. But
it not targeted for improvement in the efficiency of banks. The banking sector plays an important role in
the economy of a country. Banking system helps in stabilization, mobilization of resources and balanced
growth of economy of a country. Besides, corruption, fraud, misutilization in public money, outdated
technology and politicization in policy making were found to be major drawbacks in the real progress of
the banks. As major reforms were urgently felt, long after twenty two years of nationalization, to revive
Indian banks in the field not only of profitability but also of the overall efficiency, better management of
non-performing asset (NPA), satisfying capital requirements, increased cost effectiveness and control,
enhanced customer service, improved technology, establishing competitive interest rate, effective man-
power planning, introduction of asset- liability management, better productivity, launching new products,
and becoming more competent to face the upcoming challenges and competition from foreign as well as
private sector banks in the era of globalization and liberalization.
Keywords: - Committee on Financial System (CFS), Public banks , Private
Sector Banks, Nationalization of Bank, Financial sector Reform
1. PROBLEM TO BE STUDIED : in to collapse of a few lending institutions notably

The past decade has witnessed a sequence of Lehman Brothers, AIG and others. Although the
banking crisis almost all over the world, some of Indian banking system has no direct impact of the
them related to acute fluctuations in assets prices, recent international financial crisis, nevertheless
inexorable spells of exchange market volatility there has been an indirect impact of global
change in macro economic conditions and recession on Indian Banking system from the
complications in key emerging global financial angle of trade and capital flow, Public and privet
markets. investment, export deterioration.
However the recent financial crisis in the western In this back drop of the deep rooted recent
capitalist world has substantially crippled the financial crisis, the greatest challenge before the
operations of investment banking sector in United Indian banking system is the credit procedures
States, United Kingdom and Western Europe. The and the institutional environment both in the context
recent international crisis is, therefore, the crisis of internal and external changes relating to profit
of banks arent lending business and consumer’s and national and international linkages to
arents spending with a continuous sequence of commercial viability of banks in which the
default as borrowing short and lending long that transactions of credit takes place. Thus, the whole
have raised both the proportion of non performing issue of making an appropriate research design
loans and reduced capital base of most of the for this proposed study of the performance
investment banks in U.S. and consequently resulted analysis of the banking sector reforms in India is
essentially moving around to impart quantitative the objectives of the study which provides a strong
changes to banking operations by regenerating a base for framing both the theoretical as well as
new spirit of restoring the financial health and empirical investigation into the problems.
commercial viability of banking system in more
open and vibrant manner in the areas such as: 4.THE ORETICAL PRINCIPLES
(i) profitability and performance INVOLVED, IF ANY:
(ii) reconciliation of accounts Theoretical principles involved into the
(iii) non performing advances proposed study would be based on productivity,
(iv) capital adequacy and privatization and performance, profitability of banking sector in the
(v) rural banks. light of reconciliation of accounts, non-performing
In this given background there is enough advances, capital adequacy and privatization and
scope for making a research design to examine above all complex problem to making a balance
both the theoretical and empirical underpinning of between borrowing and lending by the rural banks
the emerging performance analysis of some to their poverty ridden rural population.
selected Indian banks and their impending impact Thus the entire theoretical base would
on the present and future development of trade naturally be based on the cost and benefit
and commerce in the context of the Indian economy principles, input-output analysis together with
in particular and global economy in general. opportunities and challenges before the Indian
2. OBJECTIVES OF THE STUDY: banking system for determining the interlinkages
of above stated theoretical principles of the
In the light of the above central theme,
the objectives of the propose study would be the proposed study.
following: 5. HYPOTHESIS (SUB HYPOTHESIS, IF
(i) To analyse the caused and consequences of ANY)
the emerging sequence of banking crisis in (i) The present global financial crisis has
India and it impending impact on the Indian enveloped more and less banking sector of
economy in particular and world in general. almost all the countries in the world.
(ii) To examine the strength and weakness of (ii) There is marginal direct impact of the
Indian banking sector in the light of branch impending financial crisis in Indian banking
expansion, deposit mobilization and credit sector.
deployment in the rural, semi-urban and urban(iii) A series of corrective measures are needed
areas. for revitalising Indian banking system with
(iii) To pinpoint the present and the future an emphasis on business growth, quality of
performance analysis of some select profit assets and customer services, productivity,
making banks in India in the light of financial profitability and an effective application of
sector reforms. computerisation network
(iv) To sum up the study by bring about an (iv) All the banks whether major or minor have
interlinkages of global financial crisis and its to prepare and implement policies relating to
categorical indepth consequences to the asset liability management, invest
present and future performance of Indian management, loan policy, recovery
banking system so as to manage, maintain, management, capital expenditure, human
regulate and sustain internal control of resource management and organizational
banking structure with an effective change infrastructure.
in banking culture and the modes of 6.(A) APPROACH (INCLUDING
operations. RESEARCH DESIGN IF ANY):
The analytical approach of the proposed
3. JUSTIFICATION FOR THE STUDY: study would be descriptive in nature based on
Justification for the proposed study secondary data obtain from the various national
lies in the above theme pinpointed specifically to and international information system including

World Development Report, RBI Currency and market principle for investment portfolio
Finance, Economic Survey published monthly and and limits on deployment of fund in sensitive
annual reports of the various banks, international activities.
Trade Journal. Survey carried out by the apex banks B. Competition Enhancing Measures
in India. Granting of operat ies, permission for
(B) METHODS OF STUDY / INVESTIGATION: foreign investment in the financial sector
Although the study would be based on in the form of Foreign Direct Investment
secondary data to be obtained as mentioned, (FDI) as well as portfolio investment,
however for trends performance analysis and permission to banks to diversify product
comparative measurement of performance of major portfolio and business activities.
profit making banks, suitable statistical tools and C. Measures Enhancing Role of Market
regression analysis would be undertaken for Forces Sharp reduction in pre-emption
identifying the problems and prospects as per the through reserve requirement, market
need of the proposed framing of research design. determined pricing for government
securities, disbanding of administered
INTRODUCTION: interest rates with a few exceptions and
The major aim of the reforms in the early enhanced transparency and disclosure
phase of reforms, known as first generation of norms to facilitate market discipline.
reforms, was to create an efficient, productive and Introduction of pure inter-bank call money
profitable financial service industry operating within market, auction-based repos-reverse
the environment of operating flexibility and repos for short-term liquidity management,
functional autonomy. While these reforms were facilitation of improved payments and
being implemented, the world economy also settlement mechanism.
witnessed significant changes. D. Institutional and Legal Measures Settling
Commercial banking constitutes the largest up of Lok Adalats (people’s courts), debt
segment of the Indian financial system. Despite recovery tribunals, asset reconstruction
the general approach of the financial sector reform companies, settlement advisory
process to establish regulatory convergence among committees, corporate debt restructuring
institutions involved in broadly similar activities, mechanism, etc. for quicker recovery/
given the large systemic implications of the restructuring. Promulgation of
commercial banks, many of the regulatory and Securitisation and Reconstruction of
supervisory norms were initiated first for Financial Assets and Enforcement of
commercial banks and were later extended to other Securities Interest (SARFAESI), Act and
types of financial intermediaries. its subsequent amendment to ensure
creditor rights. Setting up of Credit
REFORMS IN THE BANKING SECTOR Information Bureau for information
AND SIGNIFICANT CHANGES: sharing on defaulters as also other
A. Prudential Measures Introduction and borrowers. Setting up of Clearing
phased implementation of international best Corporation of India Limited (CCIL) to
practices and norms on risk-weighted act as central counter party for facilitating
capital adequacy requirement, accounting, payments and settlement system relating
income recognition, provisioning and to fixed income securities and money
exposure. Measures to strengthen risk market instruments.
management through recognition of E. Supervisory Measures Establishment of
different components of risk, assignment the Board for Financial Supervision as the
of risk-weights to various asset classes, apex supervisory authority for commercial
norms on connected lending, risk banks, financial institutions and non-
concentration, application of marked-to- banking financial companies. Introduction

of CAMELS supervisory rating system, introduced by RBI is worth mentioning.
move towards risk-based supervision, According to this, income on assets of a
consolidated supervision of financial bank is not recognized if it is not received
conglomerates, strengthening of off-site within two quarters after the last date.
surveillance through control returns.
Recasting of the role of statutory auditors, CONCLUSION:
increased internal control through The response of the banks to the reforms
strengthening of internal audit. has been impressive. The banks have been adjusting
Strengthening corporate governance, very well to the new environment, though gradually.
enhanced due diligence on important The reforms have not only enhanced the
shareholders, fit and proper tests for opportunities for banks but at the same time through
directors. Technology Related Measures challenges as well. As a result of entry of new
l Setting up of INFINET as the generation private sector banks, the competitive
communication backbone for the financial pressures are constantly on the increase.
sector, introduction of Negotiated Dealing The profit performance has been varied
System (NDS) for screen-based trading among different bank groups with respect of
in government securities and Real Time individual banks as well. New private sector banks
Gross Settlement (RTGS) System. have fared better than public sector banks and old
F. Non-Performing Assets (NPA) and private sector banks. There is shift of focus from
Income Recognition Norm: Non- process-based management to risk based
performing assets of banks have been a management. The Interest rate spread has
big problem of commercial banks. Non- exhibited a decline over the years in the case of
performing assets mean bad loans, that is, different groups of public sector banks and Indian
loans which are difficult to recover. Alarge private sector banks.
quantity of non-performing assets also The level of Non-Performing Assets of
lowers the profitability of bank. In this public sector banks remained high; a noteworthy
regard, a norm of income recognition development has been their significant reduction
in relation to net advances in recent years.
R E F E R E N C E
1. Reddy, Y. V. (2002). “Public Sector Banks and the Governance Challenge: Indian
Experience” Paper presented at World Bank, International Monetary Fund, and Brookings Institution
Conference on Financial Sector Governance: The Roles of
the Public and Private Sectors, New York, USA.
2. 2002 . “Monetary and Financial Sector Reforms in India: A Practitioner’s
Perspective”, Presentation at the Indian Economy Conference, Cornell University, USA.
3. 2003. “Towards Globalisation in the Financial Sector in India”, Inaugural address at the Twenty-Fifth Bank
Economists’ Conference, Mumbai. Reserve Bank of India (1991). Report of the Committee on the Financial
System (Chairman: Shri
M. Narasimham), Reserve Bank of India, Mumbai.
4. Lessons from India’s Economic Reforms in Development Challenges in the 1990s—Leading Policy-Makers
Speak from Experience. Washington, D.C.: World Bank and Oxford University Press, 2005.
5. Report of the Committee on Banking Sector Reforms. New Delhi: Government of India, 1998.
6. Report of the Committee on Financial Systems. New Delhi: Government of India, 1991.
7. Financial Sector Reforms in India: Policies and Performance Analysis. RAKESH MOHAN RBI Bulletin 2004.
8. Rao, K. S. (2013). Productivity, Cost and Profitability Performance of Scheduled Commercial Banks in India- A
Comparative Evaluation. Abhinav International Monthly Refreed Journal of Research in Management &
Technology, Vol. II, March.
Reports: 1. RBI. Annual reports. 2. News paper and periodical: 3. Economic Times, Economic and
Political weekly
Websites: 1. www.moneycontrol.com 2. www.bankersindia.com 3. www.rbi.org
News Paper: 1. Economic Times, Economic and Political weekly


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International Double Blind Peer Peviewed,Refereed,Indexed Research Journal,ISSN(Print)-0974-2832,E-ISSN-2320-5474,RNI-RAJBIL-2009/29954,Impact Factor-5.

SEPT, 2020 IMPACT FACTOR 5.901 (SJIF)

ISSN 0974-2832 (Print), E-ISSN- 2320-5474,RNI RAJBIL 2009/29954

Dr. Krishan Bir Singh

Contact - 094 139 70 222

eq [ ; l Ei knd & MkW - d`". kchj fl a g dk ekun i n , oadk; Zi w . kZ

2 SHODH SAMIKSHA AUR MULYANKAN

SHODH SAMIKSHA AUR MULYANKAN 3

Dr. Dnyaneshwar Jadhav Sandeep Kataria

Dr. Ankush Gautam Dr. Priti Bala Sharma

Dr. Rajeev Nayan Singh

SHODH SAMIKSHA AUR MULYANKAN 5

1. PROBLEM TO BE STUDIED : in to collapse of a few lending institutions notably

SHODH SAMIKSHA AUR MULYANKAN 19

20 SHODH SAMIKSHA AUR MULYANKAN

SHODH SAMIKSHA AUR MULYANKAN 21

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