8/14/2019 Reforms in Indian Banking

1/11

REFORM

SIN INDIAN

BANKING

8/14/2019 Reforms in Indian Banking

2/11

NEED

Good progress in geographical coverageProfitability - low

Large volume - NPAs

June 1991 - Foreign exchange reserves - a low level

US $ 1 billion = equal to two

weeks importsAugust 1991 inflation - 17 per cent

Reforms to improve the economic situation

8/14/2019 Reforms in Indian Banking

3/11

REFORMS

August 1991 - High Level Committee - Chairmanship - Sri

M. Narasimham - Narasimham Committee

Committee on Financial System(CFS) To examine all aspects relating to the financial system

Again in 1998

8/14/2019 Reforms in Indian Banking

4/11

REFORMS IN REAL SECTOR

Stabilization of economy control BOP & Inflation

Deregulation

Removal of the licence

Liberalization of international trade promotion of

competition

Globalization - international capital and modern

technology

8/14/2019 Reforms in Indian Banking

5/11

REFORMS IN FINANCIAL

SECTOR Improve the financial health of banks and DevelopmentFinancial Institutions (DFIs)

Transformation from highly regulated to more market-

oriented

Reduction in Ratios

CRR + SLR - 63.5 % net demand and time liabilities

(NDTL)

CRR - 5 % from 17.1.2009

SLR - 24 % from 8.11.2008

Greater amount of resources available

8/14/2019 Reforms in Indian Banking

6/11

REFORMS IN FINANCIAL

SECTORInterest Rate Deregulation Pre-reform period - Government securities &

advances - regulated by the RBI

Reforms Market forces with restrictions PLR SB

Rates

Prudential Norms

Capital Adequacy

Income Recognition

Asset Classification

Provisionin

8/14/2019 Reforms in Indian Banking

7/11

REFORMS IN FINANCIAL

SECTOR Recapitalization of Public Sector Banks (PSBs) GOI - Capital Contribution in PSBs

Performance & commitments

Equity Capital by Banks

Divestment in PSBs

Public issues

Corporate Governance

Roles of BOD & External Auditors defined

Audit Committee

8/14/2019 Reforms in Indian Banking

8/11

8/14/2019 Reforms in Indian Banking

9/11

REFORMS IN FINANCIAL

SECTOR New Private Sector Banks

January 1993 - RBI guidelines - entry of new private

sector banks Approvals - new foreign banks

Existing foreign banks - expand branch network

Insurance Reforms LIC & GIC Monopoly

Opening up of insurance sect. for private

participation

8/14/2019 Reforms in Indian Banking

10/11

REFORMS IN FINANCIAL

SECTOR Debt Recovery Tribunals

Banking Ombudsman

Quicker & inexpensive adjudication of customercomplaints

Banking Ombudsman scheme - June 1995

Revised in 2002 2009 -15 Banking Ombudsman in India

One office Mumbai

8/14/2019 Reforms in Indian Banking

11/11

THANK YOU