Page 43 - Banking Finance July 2024

ARTICLE

CHALLENGE OF

NPAS IN THE

INDIAN BANKING

SECTOR

I ndia has a long history of venerated banking system one took place during 1997-2002 and the second one started
of over 200 years, in which banks have been playing a
after the Global financial crisis in 2008.
pivotal role in making financial sector strong and viable
through sustainable pace of economic growth. Banking
System in India is diverse and encompasses commercial The Indian Banking sector encompasses both organized and
unorganized sectors and yet after so many years of
banks, regional rural banks, urban cooperative banks, and independence, a big chunk of rural populace is still under
primary agricultural credit societies. After independence, control of unorganized sector for their financial needs.
several changes have taken place in the banking sector right Formal banking sector broadly consists of the commercial
from government monitored policies to the breezing banks and co-operative banks. During pre-liberalization
liberalized world of post 1991 period. period (before 1991), 20 private sector banks had been
nationalized in two phases to implement schemes that
But fact is that despite all these changes, role of banking in would benefit poor in the country. Post-1991 period is seen
Indian Banking System remains unchanged. Apart from as change in hypothesis of Indian banking with different type
consistent changes in the financial sector, there have been of high-powered committees been constituted to bring in
two major catastrophes that banking system has faced; first new era in the banking sector.

The most admired amongst them was Narsimhan
About the author Committee (I & II), which had virtually changed the course
of banking sector in India and introduced many far-reaching
Sanjay M. Nafde
reforms in the sector including prudential norms for banks.
Chief Manager (Formerly) Other banking sector reforms based on Narsimhan
State Bank of India &
Freelance Writer committee recommendations included interest rate
deregulation, allowing public sector banks to raise up to 49%

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