Emerging Reforms in Indian Banking-International Perspectives

Emerging Reforms in Indian Banking International Perspectives Urjit R Patel This paper discusses some important reforms that will need to he implemented soon if Indian banking is to be put on a sound footing against a background of increasing global integration of the Indian economy (in both real and financial terms). The policies, drawing on international experience, are informed by the following objectives: (i) to enhance the flexibility of banks to respond effectively to changing circumstances (volatility); and (ii) to ensure the sustainability of the restitution of public sector banks. The measures discussed include maintaining a higher capital adequacy ratio; facilitating restructuring of the sector by formulating an exit and privatisation policy; implementing stricter and more transparent accounting and disclosure norms; and enhancing rule-based supervision.