Academic literature on the topic 'Narasimham Committee'

Narasimham Committee in 1991 and the licensing of the new private sector banks through the next two decades inaugurated an era of change. Meanwhile, the opening-up of the economy to increased participation by foreign players created greater opportunities for foreign banks to work with their multinational clients in India. In the more recent past, foreign banks have followed Indian corporate entities in their outbound expansions. The survival of the banking system in India through the financial crisis has demonstrated its strengths and most foreign banks present in India believe that India is a market with undeniable potential. 
 After the setting up of Foreign Banks in India, the banking sector has become competitive and customer friendly. In that, four foreign banks have set up shop in the recent past. At present, there are 43 foreign banks operating in India with a network of 334 branches.

<em>Regional Rural Banks were created with the prime intention of providing banking and financial services to people living in rural areas.&nbsp; As per 2011 census report, rural India accommodates 833 million population, constituting almost 69% of the total population.&nbsp; Despite the fact that many developmental programmes initiated by the government from almost seven decades, have brought about considerable changes in the rural infrastructure and rural lives, a lot more to be achieved.&nbsp; It is pathetic to notice that, even now, many villages lacks basic infrastructural facilities. For instance, Department of Power, Government of India, in it&rsquo;s report published on 31^st March 2011, states that, out of 6,40,268 villages in the country, 5,39,163 villages have been provided with electricity connection so far.&nbsp; It constitutes 84% of the villages.&nbsp; This information narrates that, still 16% of the villages i.e., 1,01,105 villages doesnot have electricity connection at all.&nbsp;&nbsp; This means that about 400 million people in rural areas face the challenge of access to electricity and modern energy services.&nbsp; This has adversely affected the economic productivity of the people, forcing them to rely on unsustainable use of available bio-mass resources.&nbsp; The energy situation in rural India, further gets aggravated by poor quality fuels, unreliable supply, inefficient use of available sources and limited access to reliable sources of electricity. This information is only a tip of the ice berg of the numerous problems which are persistent in the rural set up.&nbsp; Availability of loans and other financial services was very difficult and next to impossibility. To address this issue government of India has nationalized 14 commercial banks in 1969.&nbsp; The nationalization of the banks in 1969 boosted the confidence of the public in the Banking system of the country. However, in the early 1970s, there was a strong feeling that even after nationalization, there were many cultural issues, which made it difficult for commercial banks, even under government ownership, to lend to farmers and the priority sector. This issue was taken up by the government and it set up Narasimham Working Group in 1975. On the basis of this committee&rsquo;s recommendations, a Regional Rural Banks Ordinance was promulgated in September 1975, which was replaced by the Regional Rural Banks Act 1976 </em><em>to provide sufficient banking and credit facility for agriculture and other rural sectors.</em><em> As a result </em><em>the development process of RRB&rsquo;s started on 2^nd October 1975 with the forming of the first RRB in the country, the Prathama Bank with authorised capital of Rs.5 crore at its starting. Also on 2^nd October 1975, five regional rural banks were set up with a total authorised capital Rs.100 crore ($10 Million) which later augmented to 500 crore ($50 million). The Regional Rural Banks were owned by the Central Government, the State Government and the Sponsor Bank (Any commercial bank can sponsor the regional rural banks) who held shares in the ratios of&nbsp; Central Government : 50%, State Government : 15% and Sponsor Banks : 35%.</em>

Foreign banks have been associated with India for almost two centuries now. Yet, there presence has been prominently felt after the recommendations of the Narasimham Committee on financial sector reforms ushered a competitive era that triggered the entry of new private and foreign banks into the country. Foreign banks have always adapted well to the changing financial landscape in India. They have been offering products and services that suit the Indian way of living and enterprise, providing cross-border borrowings, capital and access to global markets. Foreign banks have made considerable contribution to the banking sector over time by bringing capital, technology, efficiency and best global practices to India. The present study examines the foreign banks in India for their liquidity management capacity and liquidity performance over the post financial crisis period. The liquidity of selected Indian foreign banks has been evaluated on the basis of their short-term liquidity ratios. The foreign banks fail to meet the preferred requirements of short-term liquidity parameter for the banking sector. Nonetheless, in relative terms, Citibank shows much better liquidity management in the short-term as compared to HSBC and Standard Chartered banks.

The Indian banking sector has been facing serious problems of raising Non-Performing Assets (NPAs). The NPAs has a direct bearing on the growth and profitability of banks. The NPAs are one of the major concerns for scheduled commercial banks in India. Based on the recommendations of Narasimham committee and Verma committee, some steps have been taken to manage the NPA problem in the balance sheets of the banks. As such there was no unanimity in terms of the policies followed by various banking istitutions in resolving this problem. The figure of NPAs reflect the performance of banks. The banks unable to manage its high level of NPAs is reflective of large number of credit defaults that affect the profitability and net-worth of banks and also erodes the value of the asset. The NPAs not only affect the liquidity and profitability but also pose threat on quality of asset and survival of banks. The NPAs not only affects the profitibity of the banks but also affects the economy of the country. High level of NPAs as reflective in Indian banks is also a reflection of the state of health of the industry and trade. It is very much pertinant to reduce the NPAs in order to improve the financial health in the banking system. There may be various reasons for generation of these NPAs which may be due to improper assesment or fraud. This paper proposes a solution which in turn is also an start up India initiative to minimise the reasons for creation of these NPAs.