ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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New Banking Culture and Small Borrower

The new banking culture nurtured by the economic reforms is alienating not only the small borrower but also the small saver. THE reforms in the banking sector, introduced since mid-1991 initially as part of the macro-economic adjustment programme, have changed the profile of Indian banking, particularly of public sector banks. No longer, is it now possible to camouflage inefficiencies of banking under the garb of 'social banking'. Profitability has emerged as the single-most important criterion for judging the operational efficiency of individual banks. As the Reserve Bank of India (RBI) put it: "Improving the profitability of banks would have to be a major pre-occupation..." Recapitalisation of nationalised banks, introduction of a system of income recognition, asset classification and provisioning, a greater degree of autonomy to banks in the interest rate regime, reduction in the non-performing assets (NPAs), and in the Statulory Liquidity Ratio (SLR) all these have changed the face of public sector banks. RBI deserves to be congratulated for transforming the profile of Indian banking in such a short span and so painlessly.

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