Banking reforms: Deregulation of saving deposit interest rate and management of NPAS

The banking system is the most dominant segment of the financial sector, accounting for over 60% of the funds flowing through the financial sector. The banking industry in India is undergoing a transformation since the beginning of liberalization in 1991. Interest rates have de-regulated considerably & this paper is an attempt to deal merits & demerits deregulating saving deposit interest rate. The banking sector as a whole and public sector particular suffered from considerable NPAs but the situation has improved over time. Legal developments like SARFAESI Act provides new options to banks in their struggle against NPAs. The adoption of BASAL III & Base Rate system, however imply new challenges for Indian banks as well as regulators overtime, the Indian banking industry has become more competitive & less concentrated.