The document discusses financial sector reforms in India, specifically related to the banking industry. It provides context that financial sector reforms were initiated in the early 1990s based on recommendations from the Narasimham Committee to create an efficient, competitive and stable financial sector. The reforms focused on improving the financial health of banks, making them more flexible and profitable. Specific banking reforms discussed include reducing statutory liquidity ratios and cash reserve ratios, introducing capital adequacy norms, improving non-performing asset recognition, interest rate deregulation, and allowing entry of private players.

1. Question- What do you understand by
financial sector reforms? Elucidate
some financial sector reform in context
with the banking industry in India.

2. Presented By:
Priyanka Sahu
Roll no:-M4317007

3.  The financial sector is a category of the economy made
up of firms that provide financial services to
commercial and retail customers
 The main ingredients of the financial sector are Banks,
Financial Institutions, Instruments and Markets
 It mobilise the resources from the surplus sector and
channelize the same to the different needy sectors in
the economy.

4.  The basic objective of the reform process was to create
an efficient, competitive and stable financial sector to
stimulate economic growth.
 Initiated in the early 1990s on the recommendations of
Mr. M.Narasimham.

5.  The balance of payments that had threatened the
international credibility of the country and dragged it
towards the brink of default.
 The serious fear of insolvency threatening the banking
system which had concealed its problem for years with the
aid of defective accounting policies.
 The act of Government involving large scale pre-emption
of resources from the banking system to finance its fiscal
deficit.

6.  Relatively inadequate level of prudential regulation in
the financial sector.
 Inadequately developed debt and money markets.
 Obsolete and out-dated technological and institutional
structures that lead to the consequent inefficiency of
capital markets and the rest of the financial system.

7.  First Generation (Early 1990):- Ist Phase:
-Creating an efficient, productive and profitable financial
sector to function with operational flexibility and functional
autonomy
 Second Generation (mid 1990…):- IInd
Phase:
-Strengthening the financial system and introducing structural
improvements

8.  Banking Sector
 Monetary Policy
 Financial Markets
 Forex Markets

9.  The Indian Banking sector is an important constituent of the
Indian Financial system.
 The banking sector plays a vital role of promoting business in
urban as well as in rural areas in recent years.
 Without it India can not be considered as healthy economy
 For the past three decades India’s banking system has several
outstanding achievements to its credit

10.  The Narasimham Committee I appointed to restore the
financial health of commercial banks and to make their
functioning efficient and profitable
 Recommendation aimed at changes according greater
flexibility to bank operations
 The Committee submitted its report in November 1991
with 23 recommendations

11.  Reduction in SLR and CRR
 Minimum Capital Adequacy Ratio
 Non-Performing assets & Income
recognition norms
 Deregulations in Interest Rates
 Constitution of BFS
 Technological Development
 Banking Ombudsman Scheme
 Entry of Private Players
 Setting up of RIDF

12.  The committee placed greater importance on structural
measures and improvement in standards of disclosure
and level of transparency
 Recommendations of Narasimham Committee II

13.  Asset Liability Management
 Reforms for the Merger of
Banks
 Roadmap for Foreign Banks
 Banking Codes & Standard
Boards of India
 Extension of Swabhiman
Scheme
 Revival of weak banks
 Reforms made by UPA
Government
 Upgradtion of Technology