Banking Industry in India : Reforms, Regulations & Services Quality

The banking industry all over the world has undergone transformation since the early 1980s under the impact of deregulation, advances in information technology and globalisation. Although these developments have made institutions more efficient by lowering transaction costs, they have also challenged the traditional regulatory arrangements based on institutions. Prior to reforms initiated in 1991, the banking sector in India suffered from lack of competition, low capital base, inefficiency and high intermediation costs. Ever since the bank nationalisation of 1969, the banking sector had been dominated by the public sector along with a high degree of financial repression characterised by administered interest rates. Banking sector reforms, introduced in the early 1990s in a gradual and sequenced manner, were directed at the removal of various deficiencies from which the system was suffering. The basic objectives of reforms were to make the system more stable and efficient so that it could contribute in accelerating the growth process. Banking sector reforms have supported the transition of the Indian economy to a higher growth path, while significantly improving the stability of the financial system. This book gives a vivid account of the evolution of the banking sector in India during the post-Independence period, with focus on financial reforms initiated in 1991. The various dimensions of banking industry covered in the book include, inter alia: (a) ownership and governance of banks, (b) regulation and supervision of banks, (c) credit allocation policies, (d) customer services, and (e) internet banking.