Banking Sector Performance During Liberalization in India - A Review

Financial sector in India is changed drastically since late 1990s due to technological innovation, financial liberalization with entry of new private and foreign banks, and regulatory changes in the corporate sector. The intense competition between these new entrances with the already existing public sector banks to cater needs of same pie of consumers facilitated implementation of new ways in reduce costs at the same time attracting customers/business. Further liberalization of financial sector facilitated development of capital markets; non-banking financial institutions that absorb current and potential borrowers and bank depositor thereby banks may face competition both in raising resources and in deploying them. In the current scenario, liberalization and deregulation has to go hand in hand with a greater emphasis on efficiency, consolidation, asset quality and profitability. The paper reviews the profitability of banks in India in the light of post-liberalisation policies