Answer to Question #199977 in Management for Peter Masih

Question

indian banking has witnessed major changes starting from nationalization in 1969 of 14

private sector banks again to privatization of banks in 1990s. year 2014 resulted in

setting of small payment banks in different nooks & corners of the country to a

diametrically opposite step of mergers and consolidation of many weak public sector tor banks with a few large banks in 2018/19. What has been the economic & financial

compulsions/reasons for such changes in five decades? (10 Marks)

Answer 1

Reasons for Banking Reforms in India

 The series of banking reform experienced in India within one decade was brought about various economic difficulties that the country had been subjected to like high debts, double-digit inflation, etc. The reforms were therefore made to improve the economy of Indi through achievement of the following aim: First, the changes were done to bring about structural system in the entire banking system in the country to improve their performance. The changes were also aimed at making the Indian banks more competitive internationally. Another economic reason  behind the changes was improvement of the stab8iry and efficiency of all Indian banks.