25-05-2012, 12:57 PM
ROLE OF DEVELOPMENT BANKS IN INDIAN FINANCIAL SECTOR
23818178-Development-Banks-in-Indian-Financial-Sector.doc (Size: 462.5 KB / Downloads: 36)
INTRODUCTION TO TOPIC
TO INDIAN FINANCIAL SYSTEM
HISTORY OF DEVELOPMENT BANKS
INDIAN FINANCIAL SYSTEM:
Indian financial system is one of the world largest financial systems. Indian economy is world 4th biggest economy but this Indian financial system has under gone through various changes or we can say that it has different stages since its inception.
Basically Indian financial system can be divided into 3 categories:
Before independence
Pre- 1991 era
Post-1991 era
BEFORE INDEPENDENCE:
In British rule India first time seen the organized financial system, although all that was meant for British but that provided us the layout for future course of action i.e. to build our own financial system. At that time banks and other financial institutions were at their infantry stage but the given a base to build the whole system on them. That time can be considered as the preliminary stage of Indian financial system and at that time there were no development banks as the motive of colonial rule was to draw the wealth not to make country developing.
PRE 1991 ERA:
This era has seen the gradual rise in the economy of India. After independence banks and other financial institutions to provide funds were established and development banks were also a part of them which were established specially to provide financial aid to industrial sector and to promote entrepreneurship in India.
The financial system in this era was based on socialistic pattern of society and the economy was of mixed type but basically it was public sector based economy. The motive was to promote every sector of society to uplift and earn for him self. Indian financial system continued with this pattern for about 40 years but in true sense the economic growth never boosted up as there was so many hindrances and lacks in system itself which taken country in such a crisis that it has to borrow funds by pledging its gold that was called the crisis of 1991.
POST 1991 ERA:
To come out the crisis, India has to adopt the new policy regarding the financial system to speed up the growth and to raise the economy and in order to perform that a new policy of LIBERALIZATION-PRIVATIZATION- GLOBALIZATION i.e. LPG was adopted. The basic motive was to reduce the government control over the economy and to let it flourish itself. Indian financial system is currently working on this policy and now the economic growth rate has also risen. Now the development banks are working in accordance with the industry in order to satisfy their need of funds and to provide every possible help required. Although the growth is still slow in comparison with other countries but soon India will become the strongest economy of world.
HISTORY OF DEVELOPMENT BANKS
The concept of development banking rose only after Second World War , Successive of the Great Depression in 1930s. The demand for reconstruction funds for the affected nations compelled in setting up a worldwide institution for reconstructions. As a result the IBRD was set up in 1945 as a worldwide institution for development and reconstruction. This concept has been widened all over the world and resulted in setting up of large number of banks around the world which coordinating the developmental activities of different nations with different objectives among the world.