Liberalization and Development of Financial Sector in Post-independence India

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