Winds of change have been sweeping the Indian banking system since 1991. Some of the important changes relate to growing competition from within and without, technological upgradation and enhanced supervision and monitoring. The transition from one phase to another has largely been influenced by the dynamics of three critical factors, viz. the players, the playing fields and the regulator.
That the banking sector reforms in India have transformed the face of banking is clearly reflected in terms of the steady improvement in Capital to Risk Assets Ratio (CRAR), reduction in the level of both gross and net NPAs, improvement in the operating profit to asset ratio, asset quality, return on assets (RoA), productivity, profitability, etc.
The banking system has successfully weathered various changes. The strength of the Indian banking system is clearly reflected in the successful implementation of Basle-I norms and improved earnings, sequential reform measures, maintenance of stipulated capital adequacy level, adoption of 90 days international norm of asset classification, institutional and legal reforms and expansion of the capital base with equity participation and diversification of ownership.
The banking sector reforms need to be examined against the broader macro-economic canvas of rapid expansion of services sector, growth of external sector, need for enhancing investments in infrastructure and the critical role of agriculture and allied activities. These are not ephemeral issues and require thrust on greater specialization by banks in different niches of the market such as retail, agriculture, export, the small-scale and corporate sectors; greater reliance on non-fund business such as advisory and consultancy services, guarantee and custody services; greater overlap in product coverage between commercial banks and non-bank financial intermediaries; and greater financial disintermediation with large companies accessing securitised debt domestically and from financial markets abroad.
The candid, provocative and forceful papers in this book attempt to look at the entire spectrum of issues in the banking sector in a proper historical and comparative perspective, raise questions and provide an insight into banking development. The book will be useful to the students of Economics and Banking, professional bankers, policymakers, executives and researchers in this field. The common readers will find it highly informative.
Manoranjan Sharma is Deputy General Manager in Canara Bank.
He has a brilliant multi-disciplinary background, viz. a First Class Bachelor's degree, a First Class First Master's degree in Economics and a First Class Postgraduate Diploma in Business Management (equivalent to MBA). He has extensive experience in managing policy and strategic processes, analysing different facets of the macro-economy and has proven track record in economic policy research.
With about 200 works, including a dozen papers presented at various global conferences, Mr Sharma is an influential thinker in development studies today. He has published three important edited books titled Leading Issues in Indian Economy, Essays in Money, Finance and Banking and India’s Transforming Financial Sector. His views have been cited in the Indian Parliament, Analyst, Dow Jones, CRISIL, Wall Street Journal, etc.
