Banking Sector Reforms and Emerging Issues

Narismhan Committee reports of 1991 and 1998 form the foundation of banking reforms in India and are still regarded as the blue print of future banking landscape. Reforms have provided necessary platform to the banking sector to operate on the basis of operational flexibility and functional autonomy, thereby enhancing efficiency, productivity and profitability. Further reforms have brought out structural changes in the banking sector, eased external constraints in the working of the banks, introduced transparency in reporting procedures, restructuring and recapitalization of banks and have also increased the competitive element in the market. The special features of Indian approach have been gradualism; coordination with other economic policies; pragmatism rather than ideology; relevance to the context; consultative processes; dynamism and good sequencing, so as to be able to meet the emerging domestic and international trends. So far, India's approach to banking-sector reforms has served the country well, in terms of aiding growth, avoiding crises, enhancing efficiency and imparting resilience to the system.