Banking Industry in India

Around the world, the banking industry has undergone a transformation since the early 1980s under the impact of deregulation, advances in information technology, and globalization. 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 a lack of competition, low capital base, inefficiency, and high intermediation costs. Ever since bank nationalization of 1969, the banking sector had been dominated by the public sector, along with a high degree of financial repression characterized by administered interest rates. 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 provides a vivid account of the evolution of the banking sector in India during the post-Independence period, with a focus on financial reforms initiated in 1991. The various dimensions of the banking industry covered include, inter alia: (a) the ownership and governance of banks, (b) the regulation and supervision of banks, (c) credit allocation policies, (d) customer services, and (e) internet banking.