financal and banking sector reforms in i

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steps in finanacial and banking sector reforms

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FINANCIAL AND BANKING SECTOR REFORMS : 

FINANCIAL AND BANKING SECTOR REFORMS SHAMIRUDHEEN SHIREEN ZAINUDHEEN

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1.FINANCIAL MARKETS 2.REGULATORS 3.THE BANKING SYSTEM 4.NON-BANKING FINANCE COMPANIES 5.THE CAPITAL MARKET 6.MUTUAL FUNDS 7.OVERALL APROACH TO REFORMS 8.DEREGULATION OF BANKING SYSTEM 9.CAPITAL MARKET DEVELOMENT 10.CONSOLIDATION IMPERATIVE FINANCIAL&BANKING SECTOR REFORMS 2 12/29/2008

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#1.FINANCIAL MARKETS:- Private sector institutions played an important role.They grew rapidly in commercial banking and asset management business.with the opening of this institutions ,they started making debt in the market. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 3

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#2.REGULATORS:- The finance ministry continuously formulated major policies in the field of finance. The government accepted the important role of regulators.The RBI become more important, SEBI and the IRDA became important institutions. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 4

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#3.BANKING SYSTEM:- The RBI has given licence to new private sector banks as part of the liberalisation process. Many banks are successfully running in the retail and consumer segment ,but they are yet to deliver services to industrial finance,retail trade,small business and agricultural finance. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 5

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#4.DEVELOPMENT FINANCE INSTITUTIONS:- FIs’s access to SLR funds reduced. Now they have to approach the capital market for debt and equity funds.DFI’s such as IDBI,ICICI have entered other segments of financial services such as commercial banking, asset management and insurance through separate ventures. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 6

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#5.NON BANKING FINANCE COMPANIES:- In the case of new NBFCs seeking registration with RBI,the requirment of minimum net owned funds has been raised to 2 crores.Untill recently, the money market in India was narrow and circumscribed by tight regulations over interest rates and participants. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 7

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#6.LONG TERM DEBT MARKET:- The development of a long term debt market is crucial to the financing of infrastructure. The SEBI decided to concentrate on the development of the debt markets, stamp duty is withdrawn at the time of dematerialization of debt instruments in order to encourage. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 8

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#7.THE CAPITAL MARKET:- The number of share holders in India is estimated at 25 million.How ever ,only an estimated 2 lack persons actively trade in stocks. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 9

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#8.MUTUAL FUNDS:- The mutual fund industry is now regulated under the SEBI regulations,1996 and amendments there to. With the issuance of SEBI guidelines,the industry had a frame work for the establishment of many more players,both Indian and foreign players. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 10

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#9:OVERALL APPROACH TO REFORMS:- The last ten years have been major improvements in the working of various financial market participants. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 11

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#10.DEREGULATION OF BANKING SYSTEM:- Government pre-emption of banks’ resources through SLR and CRR.New private sector banks allowed to promote and encourage competition.Recovery of debts due to banks and the and the financial institutions Act 1993 passed,and special recovery tribunals set up to facilitate quicker recovery of loans arrears. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 12

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#11.CAPITAL MARKET DEVELOPMENT:- The capital Issues Act 1947 ,repealed ,office of the controller of capital Issues were abolished and the initial share pricing were decontrolled. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 13

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#12.PRIVATE MUTUAL FUNDS PERMITTED:- The depositories Act had given a legal frame work for the establishment of depositories to record ownership deals in book entry form. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 14

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#13.BUY BACK OF SHARES ALLOWED:-The SEBI started insisting on greater corporate disclosures.Steps were taken to improve corporate governance based on the report of a committee. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 15

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#14.CONSOLIDATION IMPERATIVE:- The consolidation of existing institutions which is especially applicable for the commercial banks.In india, the banks are in huge quantity.There is no need for 27 PSBs with branches all over India. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 16

CONCLUSION : 

It is not possible to play the role of the Oracle of Delphi when a vaste nation like India is involved. How ever a few trends are evident, and the coming decade should be as interesting as the last one. 12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 17 CONCLUSION

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12/29/2008 FINANCIAL&BANKING SECTOR REFORMS 18 THANK YOU