Abstract
Development in the financial sector, in particular, the banking sector, plays a key role in stimulating and stabilizing economic growth. Since the foreign exchange crisis in 1991, India has undertaken banking sector reforms. This paper focuses on the following two issues. First, I provide an overview of development in the banking sector over the years, especially after the implementation of the reform policy programs. In order to show the evolution of the Indian banking sector, I examine the reserve ratios reduction, interest rate deregulation, and ratios of non-performing assets. Second, this paper investigates the performance of banking groups by comparing the degree of profitability, and the soundness and efficiency of banks in India. In conclusion, while reform policies have had positive effects on the performance of banks, especially Public Sector Banks in India, the Indian government has to take further steps to deregulate and liberalize the banking industry.
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