REFORMS IN BANKING SECTOR

GROUP MEMBERS

DEEPAKCHANDANSIDDHANTALI ASGARPRADAMAN

What is banking?

“ Bank is an institution which trades in money, an establishment for the deposits,custody and issue of money,as also for making loans and discounts and facilitating the transmission of remittances from one place to another”.

Types of bank in India

Commercial Banks Industrial Banks Agricultural Banks Exchange Banks Central Banks Indigenous Bankers

Main reforms in banking sector Government equity in banks has been

reduced and strong banks have been allowed to access the capital market raising additional capital.

Bank now enjoying the operational freedom in terms of opening of new branches and bank having good track record of profitability given flexibility in recruitment.

Main reforms in banking sector

New private sector banks have been set up and foreign banks are allowed to expend their function in India including through subsideries.

Banks are also allowed to set up off shore banking units in SEZ.

new instrument have been introduced for better flexibility and better risk management like interest rate exchange, cross currency forward contract.

Main reforms in banking sector

New areas open like-: Insurance Credit card Infrastructure financing Gold banking Investment banking

Main reforms in banking sector

Several new institution have been set up-: National securities depositor limited Central depositors service limited Credit information bureau India limited

Limits for overseas investment have been liberalized.

The overseas investment for corporate have been raised to hundred percent

Main reforms in banking sector

Universal banking has been introduced. Adoption of global standard-: Prudential norms for capital adequacy,

Assets classification , income recognization, best accounting system, settlement system are adopted

Competition enhancing measures

Freedom in operation Disinvestment of public ownership in public

sector bank Transparent norms for private and foreign bank Permission for FDI and portfolio investment in

banking

Measures enhancing the role of market forces

Interest rate on domestic term has been deregulated

Reduced pre-emption. Enhanced transparency and disclosure.

Instutional and legal measure

Strengthening of credit information and creditors right.

Passed the recovery of debt act in 1993 to facilitate and speed up .

Six special tribunals have been set up And appellate Tribunal has also been set up in mumbai.

Improved framework for payment and settlement.

Techenological Related measures

Dedicated communication as bakbone for banks.

Introduction of product through communication network.

Electronic funds transfer . Centralised banking or core banking . Structured financial messaging solution.

Measure in Interest rates slab

Prime landing rate of SBI and other banks of over Rs 2 lakhs has been reduced .

Rate of interest on bank loans above Rs 2 lakhs has been fully decontrolled .

The interest rates on deposits and on advance of all co-operative bank have been deregulated.

Interest rate on domestic term deposits has been decontrolled .

Supervisory measures

Setting up an autonomous body for supervision provision

Introduction of off-site surveillance Monitoring systematically, important financial

institutions

Thank you