Indian Financial Sector: Structure, Trends, and Turns

Project On Indian Financial Sector: Structure, Trends, and Turns

Abstract

This paper traces the story of Indian financial sector over the period 1950-2015. In identifying the trends and turns of Indian financial sector, the paper adopts a three period classification viz., (a) the 1950s and 1960s, which exhibited some elements of instability associated with laissez faire but underdeveloped banking; (b) the 1970s and 1980s that experienced the process of financial development across the country under government auspices, accompanied by a degree of financial repression; and (c) the period since the 1990s till date, that has been characterized by gradual and calibrated financial deepening and liberalization.

Introduction

Financial Sector in the Indian economy has had a checkered history. The story of the post-independent (i.e., post-1947) Indian financial sector can perhaps be portrayed in terms of three distinct phases – the first phase spanning over the 1950s and 1960s exhibited some elements of instability associated with laissez faire but underdeveloped banking; the second phase covering the 1970s and 1980s began the process of financial development across the country under government auspices but which was accompanied by a degree of financial repression; and the third phase since the 1990s has been characterized by gradual and calibrated financial deepening and liberalization.

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