Narasimhan Committee
ABSTRACT
India has over the last decades experienced different degrees of repressive policies in the banking sector. This paper focuses on the changing intensity of three policies that are commonly associated with financial repression, namely interest rate controls, statutory pre-emptions and directed credit as well as the effects these policies had. The main findings are that the degree of financial repression has steadily increased between 1960 and 1980, then declined somewhat before rising to a new peak at the end of the 1980s. Since the start of the overall economic reforms in 1991, the level of financial repression has steadily declined. Despite the high degree of financial repression, no statistically significant negative effects on savings, capital formation and financial development could be established, which is contrary to the predictions of the financial liberalization hypothesis. The Indian banking industry is measured as a flourishing and the secure in the banking world. The country's economy growth rate by over 9 percent since last several years and that has made it regarded as the next economic power in the world. The paper deals with the banking sector reforms and it has been discussed that India's banking industry is a mixture of public, private and foreign ownerships. The major dominance of commercial banks can be easily found in Indian banking, although the co-operative and regional rural banks have little business segment. Further the paper has discussed an evaluation of banking sector reforms and economic growth of the country since from the globalization and its effects on Indian economy. Competition among financial intermediaries gradually helped the interest rates to decline
INTRODUCTION
The efficient, dynamic and effective banking sector plays a decisive role in accelerating the rate of economic growth in any economy. In the wake of contemporary economic changes in the world economy and other domestic crises like
India has over the last decades experienced different degrees of repressive policies in the banking sector. This paper focuses on the changing intensity of three policies that are commonly associated with financial repression, namely interest rate controls, statutory pre-emptions and directed credit as well as the effects these policies had. The main findings are that the degree of financial repression has steadily increased between 1960 and 1980, then declined somewhat before rising to a new peak at the end of the 1980s. Since the start of the overall economic reforms in 1991, the level of financial repression has steadily declined. Despite the high degree of financial repression, no statistically significant negative effects on savings, capital formation and financial development could be established, which is contrary to the predictions of the financial liberalization hypothesis. The Indian banking industry is measured as a flourishing and the secure in the banking world. The country's economy growth rate by over 9 percent since last several years and that has made it regarded as the next economic power in the world. The paper deals with the banking sector reforms and it has been discussed that India's banking industry is a mixture of public, private and foreign ownerships. The major dominance of commercial banks can be easily found in Indian banking, although the co-operative and regional rural banks have little business segment. Further the paper has discussed an evaluation of banking sector reforms and economic growth of the country since from the globalization and its effects on Indian economy. Competition among financial intermediaries gradually helped the interest rates to decline
INTRODUCTION
The efficient, dynamic and effective banking sector plays a decisive role in accelerating the rate of economic growth in any economy. In the wake of contemporary economic changes in the world economy and other domestic crises like