New Paradigms in Banking

Abstract

In India, the last 10 years have seen major improvements in the working of various financial market participants. The government and the regulatory authorities have followed a step-by-step approach, not a big bang one. The entry of foreign players has assisted in the introduction of international practices and systems. Technology developments have improved customer service. On the whole, the cumulative effect of the developments since 1991 has been quite encouraging. An indication of the strength of the reformed Indian financial system can be seen from the way India was not affected by the Southeast Asian crisis. However, financial liberalisation alone will not ensure stable economic growth. Some tough decisions still need to be taken. This research paper seeks to analyse some of the thrust areas of the Banking sector in India and its impact, with an overview of the Asian context. Banking Sector Reforms have always postulated positive goals. However, the impact of Banking, economic and Governmental policies reveal a lopsided growth ailing in several quarters as well as a shortfall in targets due to several constraints. We have analysed the impact of policies on rural credit and funding, the extent of financial inclusion achieved, the need to address inequalities of income through planned redistribution of income and wealth and to channelize the Banking sector for a positive role in this regard, the funding from Banks in infrastructure and growth projects, the support to MSMEs’, the impact of monetary and fiscal policies in the context of the current economic situation, effectiveness achieved through regulation and norms and a brief assessment of system integrity and a comparative analysis in the Asian context. The Research data indicates that Banking Sector Reforms have always been pragmatic and inclusive. However, the impact of Banking, economic and Governmental policies reveal a lopsided growth ailing in several quarters as well as a shortfall in targets due to several constraints.