TABLE OF CONTENTS Both private sector and public sector institutions provide financial services in the economy. In the public sector is a vast network of nationalized and other scheduled banks (i.e., those registered with the Reserve Bank of India), specialized financial institutions and insurance corporations. In the private sector are the smaller financial services, agencies and banks and branches of international banking corporations. Significant developments have taken place in the area of financial services, with an expansion and specialization in services offered by the scheduled banks and financial service agencies. The capital markets have also gained in depth and volume of capitalization.
The banking network, both urban and rural, is extensive. All large Indian banks are nationalized, and all Indian financial institutions are in the public sector. Banks mobilize public deposits and provide working capital for industry and various sectors; financial institutions largely meet the long-term needs of business. Banks and financial institutions may also set up money market mutual funds for investment exclusively in instruments such as Treasury bills, dated government securities, commercial paper, commercial bills, and call-notice money.
Banking, like the rest of the financial system in the country, has been one of the beneficiaries of the recent economic reforms. Liberalization has been aimed at making operations more transparent and taking steps to more effectively regulate the system for greater accountability and more stability. In the area of private sector banking, whose expansion was severely curtailed prior to the 1990s, new banks...
