Modern Reforms of Banking Sector

Abstract

Banking sector reforms were introduced to remove the deficiencies in banking sector. The lack of autonomy is reflected in the fact that there is a common wage package for all bank employees irrespective of the health of the bank concerned. A globally competitive economy requires a robust and competitive banking system. The present banking system is a result of reforms and policy changes that have taken place in the past. Pre-1991, India had nationalized banks in two phases in 1969 and 1980. It meant that public sector banks (PSBs) controlled the credit supply. The post-1991 period can be thought of in three distinct chronological phases. The first one was roughly from 1991 to 1998. The second started from 1998 and continued until the beginning of global financial crisis. The third we believe is an ongoing process. In India, commercial banks are the oldest, largest and fastest growing financial intermediaries. They have been playing a very important role in the process of development. In 1949 RBI was nationalized followed by nationalization of Imperial Bank of India (New State Bank of India) in 1995. In July 1969, 14 major commercial banks were nationalized and in April 1980, 6 more were nationalized. Reforms in banking sector have led to the setting up of new private sector banks as well as entry of more foreign banks. Hence, the present Modern Reforms of Banking Sector. And the study based on Secondary Sources of information collection.