English

Abstract

Indian banking system consists of schedule commercial banks and cooperative banks, of which the Schedule Commercial Banks (SCBs) account for around 95 percent of banking system assets. SCBs are grouped into: 1) public sector banks comprising the State Bank of India and its associates, and nationalized banks, 2) private sector banks comprising old and new private sector banks, 3) regional rural banks and 4) foreign banks. The banking system in India underwent a metamorphic change with the introduction of the first phase of reform in 1991. The objective of the early phase of the reform was to create an efficient, productive and profitable financial service industry operating within the environment of operating flexibility and functional autonomy. The second phase of financial sector reforms in 1998 focused on the strengthening of the financial system and introduction of structural improvements with an aim to align Indian banking standards with the internationally recognized best practices.