India has entered the second stage of financial sector development, where market forces are helping in resources allocation and efficient price discovery process.
The harmonization of regulatory institutions and devising of new financial architecture is necessary to enhance the resilience of India’s financial sector and reduce the fragility of some financial institutions. High exposure in government securities, government guaranteed loans, improper valuation of collaterals, vulnerability to interest rate cycle, still high level of NPAs, unsatisfactory corporate governance and disclosures, inadequate surveillance, stock market volatility, risk concentration and policy failure cause concern. This necessitates improving transparency and governance, resolving failure in the industrial and financial sector, de-linking government and private sector, fostering innovation, and improving the supervisory and regulatory infrastructure. Given the debilitating impact of financial sector crisis on the economy, the stability of the financial sector should be the goal of the economy. Financial stability can be strengthened by improved financial infrastructure, enhanced competition and restructured segments of financial system.
Reform measures enhanced efficiency and stability of the banking system in India. Indian banks are well placed compared with their counterparts in developed countries. But there are persisting issues of removal of structural barriers to competition, privatisation of banking system, radical restructuring, downsizing of the balance sheet, recapitalisation and eventual privatisation of the financial institutions, withdrawal of quantitative credit controls and directed credit and modernisation of the payment system.
The inexorable process of economic reforms must continue to slash poverty and support sustainable development while strengthening financial institutions. This overarching goal of development needs a renewed thrust on financial sector reforms.
The papers included in the present book cover large areas, but all coalesce into the central theme of India’s transforming financial sector. It is hoped that the book will prove useful to a wide cross section of the reading public, including scholars and academics, the government executives, international institutions, business communities, and planners and policymakers.
Manoranjan Sharma is the Chief Economist in the rank of Deputy General Manager at Canara Bank. He has a brilliant multi-disciplinary background, obtaining 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, has incisively analysed different facets of the macro-economy and has proven track record in economic policy research.
With over 150 works, including a dozen papers at global conferences, Shri Sharma has also been nominated a Key Speaker and Panelist at several important global conferences. The high powered Expert Committee on Rural Credit set up by NABARD relied on many of his ideas for formulation of its views and the Bankers Institute of Rural Development, Lucknow identified him as an expert to review Research Project of the Swiss Agency for International Cooperation. He has edited books titled Leading Issues in Indian Economy and Studies in Money, Finance and Banking.
