Trends in Financial Development in India

Abstract

Financial system bridges the gap between savers-investors and mobilises savings into productive and efficient avenues which leads to enhanced levels of economic growth. The present study was undertaken with the objective to examine the trends in financial development in terms of depth, access, efficiency and stability of the financial system in India during the time period 1991–92 to 2016–17. The depth of financial institutions, as well as financial markets, have shown significant improvement over the time period under study. Besides, access to the financial system also enhanced. However, when the growth of the financial system in India is observed in terms of efficiency, the picture is not very rosy, particularly in the case of profitability levels of scheduled commercial banks. Although there is an increase in profitability levels over the time period, this raise is very meagre. Financial system particularly financial markets have shown a volatile behaviour which adversely affected the stability of the financial system in India. This emphasises that policymakers should also concentrate on improving the efficiency and stability of the financial system to improve the levels of financial development in India.