Profile
Settings
Refer your friends
Sign out
The banking industry is crucial to the economy. It is in charge of overseeing and regulating the smooth operation of the Indian economy. The banking sector reforms and acts aim to improve India’s banking system’s efficiency and productivity. They want to boost development and growth. They also ensure financial market stability and adequacy.
What are Banking Reforms and Acts?
The banking sector reforms and acts aim to improve India’s banking system’s efficiency and productivity. They want to boost development and growth. They also ensure financial market stability and adequacy. The primary purpose of banking sector reforms was to develop a more diverse, efficient, and competitive financial system, with the ultimate goal of increasing resource allocation efficiency through operational flexibility, better financial viability, and institutional strengthening.
Banking Acts & Reforms
There were many acts and reforms .Some of them are described below :
|
The Companies Act (Amended) |
2015 |
This amendment allows the formation of companies without a minimum paid-up capital. |
|
The Insurance Laws (Amendment) Act |
2015 |
This amendment provides IRDAI with more flexibility in its functioning to work more efficiently. |
|
Securities Law (Amendment) Act |
2014 |
This amendment allows the Security and Exchange Board of India to go after fraudulent investment schemes, especially Ponzi schemes. |
|
Factoring Act Rules |
2011 |
This act provides a formal definition to the Factoring Business in India. |
|
Government Securities Act |
2006 |
This act provides provisions for improving the government securities market and its management. |
|
Credit Information Companies Act |
2005 |
This act provides provisions for the regulation of credit information companies and ensures efficient distribution of credit. |
|
Industrial Development Bank Act |
2003 |
This act made the Industrial development Bank a company registered under the Companies Act, 1956, and continued its banking business. |
|
Prevention of Money Laundering Act |
2002 |
This act provides provisions to prevent money laundering cases and the consequences of such cases. |
|
Foreign Exchange Management Act |
1999 |
This act provides provisions and amends for foreign exchange management. |
|
Industrial Reconstruction Bank Act |
1997 |
This act allows the transfer of the undertakings of particular banking companies to control the economy and its development. |
|
Debts Recovery Appellate Tribunal Rules |
1994 |
This led to the introduction of certain provisions for debt recovery called Debts Recovery Tribunals. |
|
The Industrial Finance Corporation Act |
1993 |
This act led to the repealing of The Industrial Finance Corporation as a Statutory Corporation. Under the Companies Act, it became a public limited company. |
|
Securities and Exchange Board of India Act |
1992 |
This act is to monitor and regulate the securities market of India. |
|
SIDBI Act |
1989 |
This act led to the establishment of the Small Industries Development Bank of India. The goal is to coordinate and assist the industry’s operations. |
|
Banking Companies Rules |
1985 |
This amendment led to the addition of certain regulations related to Nomination |
|
Chit Fund Act |
1982 |
This act is responsible for providing laws and regulations related to chit funds and matters around it. |
|
The Export-Import Bank of India Act |
1981 |
This act led to the establishment of the Export-Import Bank of India to provide financial benefits and security to the importer and exporters of the country. |
|
The Regional Rural Banks Act |
1976 |
This act led to the establishment of Regional Rural Banks of India. |
|
Banking Laws (Application to Co-operative Societies) Act |
1965 |
This amendment made the Banking Regulation Act, 1949 applicable to cooperative banks as well. |
|
Limitation Act |
1963 |
This act provides a time limit for different lawsuits within, which an individual can approach the court for justice. |
|
The Deposit Insurance and Credit Guarantee Corporation Act |
1961 |
This led to the establishment of a Corporation for providing insurance of deposits and guaranteeing of credit facilities. |
|
The State Bank of India (Subsidiary Banks) Act |
1959 |
This act led to the transfer of eight banks that belonged to princely states into SBI subsidiaries. |
|
Companies Act |
1956 |
This act led to the enabling of company formation by registration and sets out the basic duties of companies. |
|
The Industrial Disputes (Banking Companies) Decision Act |
1955 |
This act is to provide modification to the decision of the Labour Appellate Tribunal. |
|
The State Financial Corporations Act |
1951 |
This act led to the establishment of State Financial Corporations. |
|
The Banking Regulation Act |
1949 |
This act is responsible for regulating all banking companies in India. |
Importance of Banking Sector Reforms and Acts
-
These banking reforms attempt to relieve banks of external constraints such as high interest rates, reserve requirements (CRR and SLR), and interest rate volatility. They want the banking sector to become more adaptable and flexible.
-
They would facilitate the formation of banks in India. It is to encourage healthy competition in order to increase production. Another area where they are focusing to improve the economy is foreign direct investment.
-
They are once again focusing on bank mergers across India. It is carried out in order to increase efficiency and productivity. These reforms have enhanced the country’s financial system’s overall performance.
Conclusion
Various banking sector reforms have been introduced in India in the context of economic liberalisation and the growing trend towards globalisation (external liberalisation) to improve operational efficiency and upgrade the health and financial soundness of banks so that Indian banks can meet internationally accepted standards.
