Bank of baroda

Overview
Today, RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for the
Indian financial system. A variety of financial intermediaries in the public and private sectors participate in India’s financial
sector, including the following:
a.
commercial banks comprising:
public sector banks;
private sector banks; and
foreign banks
b.
cooperative banks;
c.
long-term lending institutions;
d.
non-bank finance companies, including housing finance companies;
e.
other specialized financial institutions, and state-level financial institutions;
f.
insurance companies; and
g.
mutual funds.
Until the early 1990s, the Indian financial system was strictly controlled. Interest rates were administered, formal and
informal parameters governed asset allocation, and strict controls limited entry into and expansion within the financial
sector. The Government of India’s economic reform program, which began in 1991, encompassed the financial sector. The
first phase of the reform process began with the implementation of the recommendations of the Committee on the
Financial System, the Narasimham Committee I. The second phase of the reform process began in 1999.
The discussion below presents an overview of the role and activities of RBI and of each of the major participants in the
Indian financial system, with a focus on the commercial banks. This is followed by a brief summary of the banking reform
process along with the recommendations of various committees that have played a key role in the reform process. A brief
discussion on the impact of the liberalization process on commercial banks and financial sector is then presented. Also,
reforms in the non-banking financial sector are briefly reviewed.

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