Crisis Led to Banking Reforms in India

Abstract

We are living in the fast-changing world. With new emerging technologies and rapid expansion of the financial system, where as Indian banking sector was working in the close economy scenario. Indian banking system was not sound at the time of independence, few major actions were taken with a view of structural reforms in the banking sector in the back drop of the foreign exchange crisis in 1991. A series of measures aimed at changes according greater flexibility to bank operations, especially in Pointing out statutory stipulations, directed credit program, improving asset quality, the institution of the prudential norm, greater disclosures, better housekeeping, in terms of accounting practices. In the last decade, the Indian banks have faced some formidable challenges, the most significant being the large number of NPAs appearing on the books of Indian banks, this forced Indian government to the recapitalization of banks.