Reforms in Indian Banking Sector: A Paradigm Shift in Growth and Financial Inclusion in India

Banking sector reforms was the important initiative of the government to achieve the goal of financial inclusion and better performance of the banks in terms of their services and profitability. Though there is significant disagreement as to whether the 1991 reforms served as the exclusive catalyst for India’s reform movement. Without a doubt, the actions that were thereafter disclosed had a significant effect. The 1990s reforms started by the Narasimham Committee, like risk-based supervision and stricter capital adequacy requirements, were crucial in changing the banking industry. A more stable and effective industry has been ensured by the Basel Norms’ implementation, which has also strengthened the banking system’s resilience and risk management procedures. This paper adopts descriptive method of research which focuses to understand the significance of banking sector in India for promotion of financial inclusion and to analyse the various banking sector reforms and its implications on financial inclusivity and performance. To achieve these goals, the secondary data from Reserve Bank of India and has been collected and interpreted. Over the past five years, the scheduled commercial banks have demonstrated a rising tendency in the quantity of operational branches (Sharma and Choubey in Environ. Dev. Sustain. 24:293–319, 2022). The semi-urban area with the highest growth rate, 42.3%, was identified by the commercial banks. In five years, the total amount of branches rose from 19,126 to 27,219. Rural areas are growing at a rate of 20.5%, which is lower than other regions, but it is still trending upward and will get much better as a result of the actions the RBI has done to promote financial inclusion. There is an increase of 24% in bank branches operating in metropolitan areas was seen between 2009 and 2013, with a total of 14,325 branches in 2009 (Laxman et al. in Paradigm Shift in Indian Banking. New Delhi, pp. 70–80, 2008).