Suchergebnisse

The Indian banking sector has played a critical role in the overall economic growth. Private and foreign banks have started to gain traction in the sector typically dominated by government owned public banks. The sector's assets have expanded vastly on account of several factors such as financial inclusion, increased competition, Indradhanush program, on-tap bank licensing, focus on mobile banking and technology along with others. While the sector has grown significantly, challenges and roadbloacks such as weak capital position of public banks, rise in non-performing assets, poor talent retention, weak consumer protection norms continue to haunt the sector and the overall economic growth. To counter these challenges, RBI has initiated reforms such as implementation of Basel III, enhanced provisioning for NPA, revised framework for resolution of stressed MSME loans, implementation of strategic debt restructuring (SDR), shift to a risk-based supervision model along with proposing a unified financial services regulator.

The financial crisis that emerged during 2007 and overwhelmed the financial system in late 2008 also brought to the fore some of the obvious failings of the style of modelling that had been fashionable in central banks in the previous decade. The shift to Dynamic Stochastic General Equilibrium models (DSGE) of whatever sort left no real scope for money and financial markets to have an impact on the real economy. This was in part because equilibrium models based on theory are unlikely to be designed to cope with a period of disequilibrium, which is when the financial system becomes important in macroeconomics. DSGE models come in various guises, and it was common to operate with a three-equation model with demand, supply and the interest rate as the equations. It is hard to see how the financial sector could fit into this, or what use it would be even if it were included. Larger DSGE models that respect the national income identity are easier to augment with a financial sector; but even that developed by the US Federal Reserve (see Edge, Kiley and Laforte, 2010) tends to return to equilibrium rather more rapidly than seems reasonable.