Banking Sector Regulation in India: Overview, Challenges and Way Forward

Abstract

The Indian banking industry is undergoing the rollout of innovative banking models in the form of more promotion to private banks for attaining the productivity and efficiency. However, increase in the quantity of non-performing assets, poor credit growth and low profitability of Indian banks cast doubt about the industry’s resilience towards maintaining the country’s economic growth trajectory. While taking lessons from global regulatory bodies and keeping in view the domestic problem of the Indian banking industry, the dire need of the hour is to maintain proper checks and balances on banking transactions. The article goes on to sum up the various measures initiated by government to deal with banking-sector challenges and how an attempt is made to adapt regulatory measures from global best practices which could help the banking sector in India become more robust, efficient and effective in preventing all fraudulent transactions and enhancing the quality of its assets.

The use of proactive communication through knowledge management to create awareness and educate clients on e-banking fraud prevention

“…The next step is to develop a KM strategy that SABRIC can use to address perceived risks and safeguard client relationships and the centre's good reputation by addressing the role of government, industry, academics and nongovernmental organisations in the prevention of banking fraud. The need for government intervention is underlined by Nataraj and Ashwani (2018) who said:…”

“…According to Andrews and Boyle (2008, p. 60), the main factors that affect client relations are the perceived risk, e-security, trustworthiness and privacy associated with transactions, especially in internet banking. The perceived risks emanating from cybercrime are equally as important in the world of growing digitisation, as clients face the risk of losing money through fraudulent transactions and misusing personal information (Drennan, Sullivan Mort, & Previte, 2006;Nataraj & Ashwani, 2018).…”

Interlinkages of market power, price and liquidity network in banks: evidence from an emerging economy

“…With an intent to restore the health of Indian banks, plagued with rising NPA, the Insolvency and Bankruptcy Code (IBC) 2016 was introduced. The prime motive of IBC is to recapitalize banks via faster insolvency resolution and improved competitive conditions in the Indian banking sector (Nataraj and Ashwani, 2018). Conclusively, introducing the BASEL III framework and Insolvency and Bankruptcy Code 2016 has initiated a change in the Indian banking sector (Panda, 2017), and the intensity of competition within this industry has completely transformed.…”

Financial inclusion in north-eastern region: an investigation in the state of Assam

“…The study concludes that financial inclusion is a tool for reducing income inequality, and income inequality has a very negative effect on gross domestic product (GDP) growth. The Indian financial system, constituting majorly of the banking sector, has dual responsibilities to perform -financial services as well as services for achieving the social missions of the Government (Nataraj and Ashwani, 2018). In a study, Beck et al (2007) have opined that higher geographic and demographic penetration indicates easier access to financial services.…”