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The Committee on Financial System (CFS), popularly known as Narasimham Committee, was set up in 1991 to make recommendations for bringing about the necessary reforms in the financial sector. Narasimham Committee appraised and acknowledged the success and progress of Indian banks since the major banks were nationalized on 19 July 1969. Unfortunately, the developments were witnessed only in the field of expansion and spread of bank branches, generation of huge employment and mobilization of savings rather than also in improvement in efficiency. Besides, corruption, fraud, misutilization in public money, outdated technology, and politicization in policy making were found to be major drawbacks in the real progress of the banks.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 the banking sector plays an important and crucial role in the economy of a country for its stabilization and balanced growth, major reforms were urgently needed, after 22 years of nationalization, to revive Indian banks. This was not only in the field of profitability, but also in the overall efficiency, viz., better management of non-performing assets (NPAs), 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. The objectives of the study are to examine the need and relevance of reforms in Indian banks, to assess the efficiency and profitability of Indian banks during reforms from different perspectives, to discuss various issues of NPA management in the light of reforms, to measure the performance of the banks of West Bengal during the reforms, to analyse the role of information technology and its relevancy in Indian banks in the era of reforms, and to impart necessary suggestions for the improvement of the efficiency and profitability of Indian banks.
Prior to economic reforms initiated in early 1990s, the banking sector in India suffered from lack of competition, low capital base, inefficiency, and high intermediation costs. The banking industry - dominated by the public sector - was subject to a high degree of financial repression, characterized by administered interest rates and allocated credit. Reforms in India's commercial banking sector had two distinct phases. The first phase of reforms focused mainly on enabling and strengthening measures. The second phase of reforms placed greater emphasis on structural measures and improvement in standards of disclosure and levels of transparency in order to align India's standards with international best practices. Reforms have brought about considerable improvements, as reflected in various parameters relating to capital adequacy, asset quality, profitability, and operational efficiency. Although commercial banks still face the problem of overhang of non-performing assets, high spread, and low profitability in comparison with banks in other emerging market economies, India's reforms - which are examined in this book - have been successful in enhancing the performance of commercial banks in terms of both stability and efficiency parameters.
This fascinating and timely work explores in detail the changes in the Indian banking sector over the last 20 years, and puts them into a comparative perspective with the Chinese banking sector. For this purpose, the author develops a detailed indicator-based framework for assessing the liberalization of a banking sector along various process steps based on financial liberalization and transformation studies. The key finding is that while liberalization has improved the sectoral performance, it has so far had no effect on the macro level.
In 1992, the Reserve Bank of India launched banking sector reforms in India to create a more profitable, efficient, and sound banking system.The reforms include the competition enhancing reforms, reforms enhancing role of market forces, prudential reforms, supervisory reforms, institutional and legal reforms, reforms related to the customer service in banks, technological reforms, and the payment and settlement systems reforms.In the context of these banking sector reforms, the present book attempts to discuss the banking sector reforms in India and to analyze and compare the financial performance of commercial banks in India on various aspects such as profitability, liquidity, capital adequacy, assets quality, and off-balance sheet strength in post reforms era. Moreover, it also attempts to extract the financial ratios which significantly predict the financial performance of commercial banks.The book should be especially useful to banking officials, researchers in the area of banking and finance, stakeholders of commercial banks, or anyone else who is interested in understanding the dynamics of financial performance analysis.
The Indian banking industry has passed through various phases of change marking its development. Performance of the commercial banks is an important indicator of the state and growth of the banking system in India which can be measured in different terms. This paper makes an attempt to analyze the performance of the four major banks in India, namely, Punjab National Bank (PNB), State Bank of India (SBI), ICICI Bank and HDFC Bank, for the period 2009-2014. The paper analyzes the impact of various performance parameters on the performance of the selected banks using secondary data. The performance of the banks has been measured using different ratios, and regression analysis has been applied to find the factors predominantly affecting the performance of the banks. The results show that net NPA ratio as a percentage of loans, savings deposit as a percentage of total deposits, priority sector advances as a percentage of total advances and total income as a percentage of capital employed are the factors predominantly affecting the performance of banks.
This book provides a historical evaluation of banking reforms and structural changes in India over the past 25 years. Chapters cover issues in consolidation and restructuring, competition and concentration, performance evaluation in terms of cost efficiency and productivity, profitability, non-performing assets and technology use. The authors use specific regression models to measure the impact of these reforms on bank performance during this period and assess whether or not the consolidation phase is now complete. This volume will be of interest to researchers and academicians interested in the financial history of Indian Banking reforms.
Contents: Venue Capital: Recent Trends in the Liberalization Context, Role of Financial Institutions and Developmental Organizations in Promoting Rural Non-farm Small Enterprises, Challenges for Indian Banking Industry, HRD Practices in Banking Sector: An Analysis, The Balance Sheet of Liberalization: A Study of the Banking Sector, The Menance of Non-performing Assets: Challenges and Remedial Measures, Credit Disbursement by Commercial Banks After Second Generation Reforms, Financial Sector Reforms and Their Impact on Banks, Voluntary Retirement Scheme: Impact on Banking Sector, Emerging Challenges of Electronic Banking, Information Technology in Banks, Relationship Between Stock Prices and Exchange Rates, Corporate Governance: An Overview, Corporate Frauds: A Model for Good Governance, Development of Technical Entrepreneurship, Perspectives of Entrepreneurship Development Role of STEPs, and Innovation and Business Incubators, Management of Human Resource, Human Resource Managers Challenges, Managing Talent: A Market Driven Approach, Hallmarks of High Performing Organizations, India Shining with Human Strategic Strength, Human Resource Management with Specific Case Studies in India, Human Resource Management: Challenges in the New Millennium, Traditional Professional Communities: Their Reorientation, Human Resource Development As Strategic Strength, HRD As A Strategic Power, Developing Human Resource As A Strategic Strength, Transcultural Human Values, Rationalisation: A Competitive Advantage.
​ The goal of this book is to assess the efficacy of India’s financial deregulation programme by analyzing the developments in cost efficiency and total factor productivity growth across different ownership types and size classes in the banking sector over the post-deregulation years. The work also gauges the impact of inclusion or exclusion of a proxy for non-traditional activities on the cost efficiency estimates for Indian banks, and ranking of distinct ownership groups. It also investigates the hitherto neglected aspect of the nature of returns-to-scale in the Indian banking industry. In addition, the work explores the key bank-specific factors that explain the inter-bank variations in efficiency and productivity growth. Overall, the empirical results of this work allow us to ascertain whether the gradualist approach to reforming the banking system in a developing economy like India has yielded the most significant policy goal of achieving efficiency and productivity gains. The authors believe that the findings of this book could give useful policy directions and suggestions to other developing economies that have embarked on a deregulation path or are contemplating doing so.
Banking sector in India has undergone remarkable changes since the nationalisation of 14 major commercial banks in 1969. The geographical and functional coverage of banks has surged at a rate that is unprecedented in the world. Nationalisation of commercial banks in 1969 and 1980 was a mixed blessing. Reforms have brought about considerable improvements as reflected in various parameters relating to capital adequacy, asset quality, profitability and operational efficiency. Unfortunately, commercial banks continue to face the problem of non-performing assets (NPAs). The present volume deals with various aspects related to the development of commercial banks in India, with particular focus on post-liberalisation (1991 onwards) developments.
The year 1991 marked an important watershed in the economic history of post-Independent India. The country went through a severe economic crisis triggered by a serious balance of payments situation. The crisis was converted into an opportunity to introduce some fundamental changes in the content and approach to economic policy. The purpose of this book is to detail the structural reform process undertaken by India and to evaluate its results. In the post-liberalization period, the country has moved to a higher growth path. Objective conditions exist for the economy to grow at a sustained rate of seven per cent. The slow growth in agriculture and the consequent impact of a slower decline in poverty reduction are areas of concern.