Post-reform Development of Banking Sector in India

The study examines several facets of the banking sector development during the post-reform period starting from change in structure of banking sector to efficiency, productivity and soundness. This is done with the help of accounting measures. Indian banking sector has been able to transform itself from a traditional banking set-up to a modern and universal banking system by providing various services without distorting the social banking component. Adoption of new technology facilitated such transformation. It is now following the best international practices as set by the Basel norms. As a result, various efficiency/productivity and soundness parameters have moved towards the best global standard. Significant achievement was observed in case of public sector banks without damaging social obligations. It is now competing with the new private sector and foreign banks which operate in free environment unlike the public-sector banks. The analysis of various accounting measures suggests that there has been a significant improvement in the efficiency and productivity of the commercial banks in the post-reform period, although the degree of improvement varies across the bank groups. It has placed itself into a global standard in many aspects, including new product, service quality and improved payment and settlement system. However, at the same time lot of challenges are also being faced by the banking sector, which needs special attention.