Basics of Banking - Part I

The banking sector is the lifeblood of any modern economy. It is one of the main financial pillars of the financial sector, which plays a crucial role in the functioning of an economy. Financing is very important for the economic development of a country The demands of trade, industry and agriculture are met with greater commitment and responsibility. Therefore, the development of a country is inseparable from the development of banking. In a modern economy, banks should not be viewed as intermediaries in money, but as a development leader as they are playing a key role in organizing deposits and disbursing loans to various sectors of the economy. 

The banking system reflects the country's economic health. Economy depends on the strength and efficiency of the financial system, which in turn depends on a solid and solvent banking system. A strong banking system efficiently organizes savings in productive sectors, and a solvent banking system ensures that the bank can meet its obligations to  depositors. In India, banks play a crucial role in the country's post-independence socio-economic progress. The banking sector is dominant in India and accounts for more than half  of the financial sector's assets. Indian banks have gone through oneexciting phase due to the rapid changes caused by financial sector reforms that are being implemented step by step. own without burdening the government.

Following the liberalization of the Indian economy, based on  the recommendation of the Narasimhan Committee, the government announced a series of reform measures to make the banking sector  viable and competitive. of the banking system to politics.Now that the crisis is almost over, the Government of India (GOI) and the Reserve Bank of India (RBI) are trying to learn lessons. The RBI is making the necessary changes in its policy to ensure price stability in the economy.The main goal of these changes is to increase the efficiency of the banking system as a whole, as well as  individual institutions. Hence, there is need to calculate the caliber of Indian banks to take corrective measures to improve the health of the banking system.