REFORMS IN BANKING SECTOR DEMONITISATION

1. Tolani College of
Commer ce
Presenting Regular Level Presentation on
“ REFORMS IN BANKING SECTOR - DEMONITISATION ”
Presented by : Miss. Sapna Yadav
First Year in B.COM ( BANKING & INSURANCE )

2. Introduction
• If Indian History of Banking Reforms studied
accurately, we will understand the what are
changes in our country after 20th century.
• The First NARASIMHAM COMMITTEE-I (1991) ( COMMITTEE
ON THE FINANCIAL SYSTEM – CFS )
Appointed by Shri. Manmohan Singh as India Finance Minister
in August 1991
• NARASIMHAM COMMITTEE-II (1998) ( COMMITEE ON
BANKING SECTOR REFORMS )
Appointed by P. Chidambaram as Finance Minister in December 1998

3. ABOUT NARASIMHAM COMMITTEE’S
• The purpose of the Narasimham-I Committee was to study all
aspects relating to the structure, organisation, functions and
procedures of the financial systems and to recommend
improvements in their efficiency and productivity. The Committee
submitted its report to the Finance Minister in November 1991
which was tabled in Parliament on 17 December 1991.
• The purpose of the Narasimham-II Committee was tasked with the
progress review of the implementation of the banking reforms since
1992 with the aim of further strengthening the financial institutions
of India. It focussed on issues like size of banks and capital
adequacy ratio among other things.

4. Demomitisation - India
• A Historic day in the History of India, when Primer Minister. Shri Narendra Modi has
announced the demonitisation of all Rs. 500 and Rs. 1,000 banknotes of Mahatma
Gandhi Series.
His Announcement was blown to the whole country.
First we introduce the man who has been credited with giving the government the idea
for demonitisation, believes that the exercise was absolutely necessary to improve the
health of the economy.
Which was the Founder and President of {“ Arthakranti Pratishtan ” }
Shri. Anil Bokil

5. The Founder of “ Arthakranti Pratishtan ” Shri. Anil Bokil. He first met Modi in
Ahmedabad in 2013, when the letter was announced as the prime ministerial
candidate for the Bharatiya Janata Party.

6. Brief History of Reforms in Banking
Sector
• By 1985, India had started having balance of payments problems.
• the end of 1990, it was in a serious economic crisis. The government was close
to default, its central bank had refused new credit and foreign exchange
reserves had been reduced to such a point that India could barely finance three
weeks’ worth of imports which led the Indian government to airlift national gold
reserves as a pledge to the International Monetary Fund (IMF) in exchange for a
loan to cover balance of payment debts.
• After Demonitisation Banking Sectors has faced a lot of trouble to to
providing banking services to large number of People’s in Nation.
• Since 2016 after demonitisation banking sectors has also Expanded Growth,
Now Everyone have Accounts An estimated 90% of the total Indian population
is reachable over the medium to be to take advantage of Banking services, Due
to DEMONITISATION THE GROWTH OF INDIA’S BANKING SECTORS ARE
TOUCHING THE HEIGHT OF SKY.

7. Demonitisation and its Effect on
Banking Sector
• Demonitisation is a tool to battle Inflation, Black Money, Corruption
and Crime, discourage a cash dependent economy and help trade.
• Banks are core part of any economy. They channelized the money
to the smooth functioning of different sectors. Initiatives of Green
Banking, made the banks to transform conventional banking
services into modern banking services. It created greater demand
to digital banking services where cashless transactions are
prioritized. Day to day operations of Banks are affected and found
tough in Management of liquidity and Employees.
• It made greater influence on Management of liquidity and its
demand raised by customers in exchanging of their banned
currency notes while minimizing risk and maximizing quality of
service.

8. After Demonitisation – INDIA
• Since 2016, Indian Banking Sector Present stance can be viewed as one of
the modernization and major transformation with the advent of Latest
Technology upgradation in banking sectors.
• Indian Rupee (INR) Stronger than currencies of other south Asian Nations
Pakistani Rupee, Sri Lankan Rupee, Bangladeshi Taka
• The products and services are offered through electronic devices with the
help of internet. Now a day, bank services are catered at the finger tip of
customers. Surgical Strike on Black Money called ‘Demonetization’
brought enormous changes in all the sectors of the country.
• A New form to Easily Access to advantages of Banking Sectors Service to
any common person stay connected with all types of Banking Services all
the things are possible in year of 2017. When Shri. Narendra Modi.
Became the Prime Minister of India.

9. Growth in Banking Sector Deposits
• During FY16–17, deposits grew at a CAGR of
12.03 per cent and reached 1.54 trillion by FY17.
• Strong growth in savings amid rising disposable
income levels are the major factors influencing
deposit growth.
• DEPOSITS UNDER PRADHAN MANTRI JAN DHAN
YOJANA (PMJDY), have also increased. As on
November 9, 2016, US$ 6,971.68 million were
deposited, while 255.1 million accounts were
opened.

10. Growth of ATM’s in India
• In ATM’s 50th year, recalling its growth — and
peak — in India
In this 1970s photo, a woman uses an
automated teller machine. 2017 marks the
50th anniversary of the ATM.
The banking system in India
notched a whopping one lakh plus
Automated Teller Machines (ATMs)
in the country, with public sector
banks accounting for a lion's share.
According to the latest data
released by National Payments
Corporation of India (NPCI), the
total number of ATMs in the
country is now 1,04,500 till
October, 2017.

11. Marginal Cost of Fund Based Lending
Rate (MCLR) After Demonitisation
• MCLR (Marginal Cost of Fund based Lending
Rate) is the internal benchmark rate for banks
used for benchmarking floating rate loans
effective from 1st April 2016.
• MCLR is based on cost of funds for banks and is
derived as sum of marginal cost of funds,
negative carry on account of CRR, operating costs
of banks and tenor premium.
• As MCLR is closely linked to repo rate, it will
improve the transmission of RBI’s repo rate cut to
the end borrower.

12. ( MCLR of Some Indian Banks )

13. ( Banking Channel Products )

14. Impact of Demonitisation on Banking
Sector
• Demonitisation is a bold decision relating to economic policy of the
nation.
• The basic reason behind the decision is curbing all black money in
India.
• Hence it can be concluded that apart from disrupting daily lives of
common citizen, there are even bigger implication for the economy
as a whole.
• The impact of demonetization on Indian economy particularly on
business environment.
• It was found that as an impact of demonetization the interest rate
may go down, increases the employability opportunity, decrease the
price of the commodity and other product.

15. THE CONDITIONS OF BANK
• As per the Reserve Bank of India (RBI), India’s
banking sector is sufficiently capitalised and
well-regulated. The financial and economic
conditions in the country are far superior to
any other country in the world.
• Credit, market and liquidity risk studies
suggest that Indian banks are generally
resilient and have withstood the global
downturn well.

16. • Market Size
• Investments/developments
• Government Initiatives
• Road Ahead –
o Enhanced spending on infrastructure, speedy implementation of projects
and continuation of reforms are expected to provide further impetus to
growth. Also, the advancements in technology have brought the mobile
and internet banking services to the fore.
o The banking sector is laying greater emphasis on providing improved
services to their clients and also upgrading their technology infrastructure,
in order to enhance the customer’s overall experience as well as give
banks a competitive edge
THE FUTURE SEENARIO

17. Banking on technology: India’s
banking industry
• Banking today is a flourishing industry,
focused on technological innovation. Internet
banking has emerged as the biggest focus area
in the “Digital Transformation” agenda of
banks.

18. Features in Banking Sector after
Demonitisation
• INTERNET BANKING
• BUSINESS INTELLIGENCE
• CUSTOMER MANGEMENNT
• RISK MANAGEMENT AND INFROMATION
SECURITY
• TECHNOLOGY IN TRAINING AND E-LEARNING
• FINANCIAL INCLUSION
• MOBILE BANKING
• PAYMENT SYSTEMS

19. Demonitisation Effects on the
Economy
• Economic costs
The rural and informal economy suffered
disproportionately because most transactions
are cash-bases. The liquidity squeeze led to a
pile-up at wholesale markets, leading to a sharp
decline in the Wholesale Price Index (WPI) of
perishables such as fruits and vegetables in the
immediate aftermath of demonitisation.

20. Demonitisation Effects on the
Economy
• The slowdown in the economy, which started
before demonetisation, also seems to have
been exacerbated by demonetisation. New
project announcements declined sharply in
the wake of demonetisation, a Centre for
Monitoring Indian Economy (CMIE) analysis
showed, hurting the capex cycle.

21. Uncertain benefits
• The one big promise of demonitisation was a rapid
expansion in the tax base but the actual results have been
quite modest. According to the finance ministry’s estimates
published in the latest Economic Survey, the tax base
expansion attributable to demonitisation was Rs10,600
crore, lower than what RBI spent on interest expenses, and
equivalent to only 0.1% of India’s gross domestic product
(GDP).
• Demonitisation did provide a boost to non-cash payments
in the short term but that effect may be waning, with the
cash-to-GDP ratio back to double-digits

22. INDIA VISION – 2020
o According to commitment given by India’s Greatest
Scientist Shri. APJ Abdul Kalam INDIA VISION 2020,
It will be in Reality.

23. Thanks for given your precious time.
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