CAUSE FOR OPTIMISM IN THE INDIA ECONOMY

The banking sector plays a crucial role in ensuring the growth of the economy. While providing infrastructure to enable economic growth, the banking sector today also competes with modern international standards.

Professor of Psychology at Harvard University, Steven Pinker, said, “there’s no limit to the betterments we can attain if we continue to apply knowledge to enhance human flourishing.” This principle, directly or tacitly, remains at the core of technological and other advancements in the different sectors of Indian industry. Developments in sectors like banking, the sunrise industry, PSUs and automobiles are interlinked and provide unique opportunities for economic growth through research and development (R&D), employment generation, and rural outreach projects, to name a few.

BANKING The banking sector plays a crucial role in ensuring the growth of the economy. While providing infrastructure to enable economic growth, the banking sector today also competes with modern international standards. However, like any other sector, banking in India has evolved over time after the reforms of 1991. The first set of reforms were based on recommendations made by the Committee on the Financial System under the chairmanship of Shri M. Narasimham with an aim to foster competition in the sector. Owing to these reforms, the financial sector has succeeded in easing external constraints in their working, introducing transparency in reporting procedures, restructuring and recapitalising banks and increasing the competitive element of the market through the entry of new banks. Overall the banking system has undergone multiple phases of change to become what it is today—efficient, productive and profitable—which is in stark contrast to how it used to be. The industry has seen the emergence of foreign and private banks which has increased competition and set accounting and disclosures standards to match international best practices.