Explain the measures taken for bringing out the Banking Sector reforms in India?

Explain the measures taken for bringing out the Banking Sector reforms in India?

The Bank of New York Building (center), at 48 Wall Street, was erected by the Bank of New York and Trust Company in 1927-29 to the plans of Benjamin Wistar Morris. Established in 1784, the Bank of New York was the second bank in the nation and New York's oldest financial institution. In 1796, it became the first bank to erect a building on Wall Street. They stayed on the same plot of land through 1998 when they vacated the present building for 1 Wall Street. Morris' 32-story Neo-Georgian skyscraper is clad in limestone and features multiple setbacks that double as open-air terraces as well as Colonial style elements, such as the flanking thatched-roofed setbacks and the top in the form of a small temple, crowned with a copper eagle at 156.5 m. The three-storey base is clad in rusticated limestone. The 29,700 m² of space within the building has been modernized and remodelled, whereas the original banking halls on the first and second floors have retained their historic styling. The first two floors are connected by an elliptical entrance lobby and all three have ample marble decor. The interior features murals made by J. Monroe Hewlett in 1929, depicting commercial and banking themes. On the right, stands 40 Wall Street, originally known as the Bank of Manhattan Trust Building, or Manhattan Company Building, and later known Trump Building. On the left, stands 60 Wall Street. The former Bank of New York & Trust Company Building was designated a landmark by the New York City Landmarks Preservation Commission in 1998. 40 Wall Street was designated in 1995. Bank of New York Building National Register #03000847 (2003) 40 Wall Street National Register #00000577 (2000) >>> NYC - Bank of New York Building

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Explain the measures taken for bringing out the Banking Sector reforms in India? - Education - College and University

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BANKING SECTOR REFORMS IN INDIA:*INTRODUCTION:~ India had an extremely regulated system of banking.~ This system suffered from various draw backs.~ To overcome these draw backs, various reforms were undertaken in two phases.~ As a result, India achieved stability and efficiency in the banking system.*CAUSES OF REFORMS:~ A highly regulated banking system had various drawbacks like lack of competition, low capital base, ineffeciency and high intermediation costs.~ Thus, the depositors and borrowers were highly dissatisfied.~ More over, after the nationalisation of banks in 1969, the pre-dominance of the public sector increased leading financial repression.~ Also modern technology had no place in the banking system and the quality of service was inadequate.~ Improper risk management systems and weak prudential standards gave rise to poor asset quality and low profitability.~ In order to improve the adverse condition of the then existing banking system, various reforms wer e introduced since 1991.~ These reforms were carried out in two distinct phase.*FIRST PHASE OF BANKING SECTOR REFORMS:~ These reforms were carried out on the recommendations of the NARSHIMAM COMMITTEE (1991:Part 1)~ These reforms can be categorised as:1)Strengthening Measures.2)Operational Flexibility Measures.3)Competitive Efficiency Measures.4)Legal Environment Measures.5)Customer Services and Priority Sector Lending Measures.1)STRENGTHENING MEASURES:~ These measures help the bank to strengthen itself to face the fluctuation in the economic environment.~ These measures comprise the following reforms:-# Capital adequcy:~ The ratio of minimum capital to risk assets is called the CAPITAL ADEQUACY RATIO.( CAR)~ The CAR has been increased to 9%. At present almost 78% banks have a CAR above 10%.~ This improves the trust and confidence of the banks in the eyes of the depositors.# Prudential Norms:~ These norms were initiated by the RBI to bring professionalism in commercial banks .~ They include asset classification, income recognition and provision for bad debts.~ These norms ensure the presentation of accurate financial position of banks as per international accounting practices.#Valuation Norms:~ These norms were more helpful to nationalised banks.~ It made it possible for nationalised banks to raise funds through public issues.# Transparency and Disclosures:~ These norms ushered in more transparency and disclosure in published account.2)OPERATIONAL FLEXIBILITY MEASURES:~ These norms provided flexibility to banks in their functioning. They include the following measures# Reduction of SLR and CRR:~ The CRR ratio was reduced considerably from 15% (1991) to 6% (2010).~ Similarly the SLR ratio was also reduced from 38.5% to 25%.~ These reduced ratios enable the bank to release more funds for commercial lending (Loans & Advance)# Deregulation of Interest Rates:~ This norm gave banks the freedom to fix their:^ Prime lending rates (excluding export c redit).^ Variable interest rates on all deposits (except savings deposits)# Setting-up Subsidiaries:~ Banks are encouraged to set-up their subsidiaries.~ This helps to diversify activities like mutual funds, venture capital, merchant banking, housing finance etc.~ This increases the profit margin and consolidates the banks position in the financial market.# Freedom of Operation:~ Banks were allowed to open new branches and upgrade extension counters.~ They are also permitted to close down non-viable branches (except in rural area).3)COMPETITIVE EFFECIENCY MEASURES:~ These measures improve the competitive efficiency of banks.~ These measures paved way for private sectors and foreign banks to enter the banking business.~ The government

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