Generated by PDFKit.NET Evaluation have nursed a dream, a dream of the great Indian people marching confidendy into the future. I dream of an India that excelsitself: " Remembering Rajiv Gandhi ... - Rajiv Gandhi ... endeavouring to fulfill his dreams. DELHI GOVERNMENT 4 YOJANAJuly 2002 Click here to unlock PDFKit.NET • •
Generated by PDFKit.NET Evaluation • PERSPECTIVE <strong>Banking</strong> Secto~ ReforDl in India: A Study Anindya Bhukta The process of strengthening the banking system has to be viewed as a continuing one. There is no finite end to improving the levels of efficiency and profitability. Infact, the situation is one where the system has to cope constantly with changes in the broader environment in which it functions and face new challenges that these developments , impose on it. FAILURE OF banks was a regular feature in the preindependence period and, though to lesser extent, even in the post-independence period. The . banking industry then was mostly in the h'ands of private entrepreneurs. As a result whenever a bank failed its customers were simply cheated and their hardearned money was forfeited. So, nationalisation of banks was a long-run demand. The demand finally was satisfied when, in 1969, though unfortunately owing to a political compulsion, the 'government nationalised fourteen commercial banks. -rhereafter, in 1980 again, six more banks were nationalised. In 1969, the slogan was introduction of mass-banking. In fact, prior to this period, private ban'ks mostly operated in the urban and semi-urban .areas. <strong>Banking</strong> facilities were out of reach of a large number of rural people. This, in turn, hampered our savings habits ahd hence investment. So spread of bank branches to remote rural areas was also another need of the hour. After nationalisation, the government decided to extend banking facilities to rural areas. The 1969-reform of banking sector got tremendous success in the sense that there was a phenomenal growth in the number of bank branches to reach every nook and corner of the country. However, in other senses, it was a total failure. A review of the performance of Indian banking sector in early 90's revealed that despite the overall progress made by the banking system in geographical and functional coverage, its operational efficiency had been unsatisfactory, characterised by low profitability, high and growing non-performing assets and relatively low capital base (Rangarajan, 1999). Against this background a programme of reform in the Indian financial sector was taken up since 1991. The financial sector reform is a part of the structural adjustment programme, initiated in 1991, basic philosophy of which is to build a market-led economy. The financial sector reform was started in 1991 on the basis of Narasimham Committee Report. The committee, headed by Mr M. Narasimham, submitted its report in Novem.ber 1991. Though the report covered the financial system ofIndia as a whole, its main thrust was on the banking sector. The banking sector accounts for 80 percent of the funds flowing through the financial sector and hence reform of the banking ,s,ector is considered urgentto build up a strong and efficient financial system, which, ir turn, is critical to the attainment of the goals of creating a market-driven, productive and competitive economy, supporting higher investment levels and acceri tuating growth. (Padmanbhan, 1998). Mr Anindya Bhukta is a Lecturer in Economics, Netaji Mahavidyalaya, Arambagh, Booghly, W. Bengal. YOJANAJuly 2002 5 Click here to unlock PDFKit.NET