Indian Banking Reforms:

Introduction: The Indian Banking Reforms started in the early 1990s

as a response to the balance of payment crisis and aimed to make the
banking sector competitive, efficient and able to provide credit to
support economic growth. The reforms were initiated by the
government and the Reserve Bank of India (RBI) to improve the
functioning of the banking sector and to bring it in line with
international standards.
Who introduced banking sector reforms?
first Narasimhan Committee
The banking sector reforms were announced in the year 1991 by the
first Narasimhan Committee. On the basis of the recommendations of
this committee, the government started the financial sector
liberalization programme.

Advantages:
Increased Competition: The reforms led to the entry of private and
foreign banks, resulting in increased competition and improved
services.
Improved Efficiency: The reforms brought in technological upgrades,
leading to increased efficiency and reduced costs.
Better Risk Management: The reforms introduced new instruments
for risk management and led to greater financial stability.
Increased Financial Inclusion: Reforms such as Jan Dhan Yojana
aimed at increasing financial inclusion and bringing a larger section of
the population into the formal banking sector.
Better Credit Disbursement: Reforms such as the MUDRA scheme
aimed at improving credit disbursement to micro, small and medium
enterprises.

Disadvantages:
Job Losses: Reforms such as computerization led to job losses in the
banking sector.
Increased NPAs: The increased competition and liberalization led to
an increase in Non-performing Assets (NPAs) in the banking sector.
Increased Income Inequality: The reforms led to increased focus on
profit maximization, resulting in higher interest rates for borrowers
and decreased access to credit for weaker sections.
Reduced Government Control: The reforms reduced government
control over the banking sector, leading to reduced regulation and
increased instances of financial fraud and mismanagement.

Note: The overall impact of the Indian

banking sector reforms has been positive,
with the sector being more competitive,
efficient, and better equipped to support
economic growth.