Banking Reforms in India

Banking reforms in India started in the real sense with the nationaIization of 14 banks in 1969 and six more in 1980, and licensing of a number of small private banks post liberalization. These new banks came to be known as New Generation tech-savvy banks. Following the merger of some banks, the banking sector was reviltalized and since then has registered a rapid growth with strong contribution from all the three types of banks, namely government banks, private banks and foreign banks. The next stage of banking reforms saw the increase of foreign direct investment (FDI) in banks from a maximum of 10% to 74%, though with some restrictions. The use of computers has led to the introduction of online banking in India, making it very convenient for the customers to make transactions. The introduction of MICR technology in the banks has provided for the use of standardized cheque forms and encoders. In 1995 was introduced the Electronic Funds Transfer (ETS) system. In 2008, RBI brought a system to allow cheque truncation which was first rolled out in the National Capital Region and then all over India. Physical as well as virtual expansion of banking through mobile banking, internet banking, tele banking, and ATMs has been taking place since the previous decade and has gained momentum in the last few years. The book describes all these key developments in banking sector in India and shows how banking sector reforms have modernized Indian banking. Besides describing banking structure before liberalization and how it got transformed after the reforms, it takes up many pertinent issues, including international developments in banking, balance of payment crisis, financial sector reforms, introduction of new financial standards, Know Your Customers (KYC) norms, technology developments, Indian banking at present and how it has gained from reforms. It will be useful for the students of commerce, bank employees and all those concerned with banking sector in India.