The deregulation of interest rates, etc. Many changes were

developments in the Indian Financial System from 1900-2017:

financial system plays a major role in developing the Indian economy. Indian
financial system acts as intermediary agent between surplus and deficit state
and facilitates the flow of funds among them. Indian financial system supplies
funds to the deficit to improve various sectors of the economy by utilizing the
resources without destabilization.

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financial reforms were started with the Narasimham committee recommendations,
which increased the level of financial system in India. These reforms improved
the banking sector, financial institutions, capital market, and money market
which formed the strong financial sector in India. These reforms helped in
forming new private sector banks with long term lending institutions to
carryout banking activities and deregulation of interest rates, etc. Many
changes were adopted by the financial system to improve the economy of India.  Due to these changes, the banking sector
improved and increased more in recent years. The financial system creates
bridge between the persons who have excess finance and the persons who require
the finance to improve the investment opportunity that leads to economic
growth. The various changes in the financial system improved the country in
industrializing which increased the level of GDP.

financial system improved the living standard of the people to acquire the
luxury things by providing funds to them. The industrialization in India is
achieved due to the financial system which helps in increasing the production
and financial capital of a country. The financial market improved the economic
growth by giving funds to the most efficient investors, and by encouraging
innovations. The financial system also enhanced the corporate sector, by
monitoring the management and improving the corporate control. The financial
institutions lend funds to the individuals, farmers, industrialists and
entrepreneurs by collecting savings from the people.

Indian financial system includes commercial banks, insurance companies,
non-banking financial companies, co-operatives, pension funds, mutual funds and
other small financial entities. Banks plays an important role in developing the
economy, by improving the industry and trade activities. It acts as a custodian
of the wealth and resources of the country which improves the economic growth. The
financial system also improved the gross domestic savings and gross domestic
product of the economy and projected its growth in the upcoming years. Most of
the household savings in India are invested in the bank deposits and other
financial assets. In 2015, India’s GDP growth increased compared to china due
to the efficiency in financial system which proves the country as developing
economy. The government of India introduced many reforms to regulate and
enhance the economy by improving primary, secondary and tertiary sectors.  The Government and Reserve Bank of India have
taken various measures to facilitate easy access to finance for large
enterprises, Micro, Small and Medium Enterprises (MSMEs), farmers and also
tertiary sectors.

government of India helps in developing many reforms which allows foreign
investors to access Indian bond markets. The financial market in India works
efficiently in providing the growth at a minimal cost. In the pre-Independence
India, the colonial system brought a considerable change in the process of
taxation which resulted in economic breakdown. In the pre-Independence India,
British made improvements in the country. The financial system established
banking system and free trade in the economy. It also established a single
currency system with exchange rates, standardization of weights and measures
and also a capital market came into existence.


independence, many reforms and policies were formulated to stabilize the
economic growth of the country. These reforms were developed to increase the
quality and quantity of the export items, making the country self-sufficient
and minimize the imports. Green revolution movement was formed after
independence to develop the productivity of agricultural sector. Developments
were made in sectors such as agriculture, village industries, mining, defense
and so on. New roads were built, dams and bridges were constructed, and
electricity was spread to the rural areas to improve the standard of living.


the year 1980s the government made a first step towards liberalization plan.
Due to this liberalization plan, India became market-based system. In the
liberalization plan, foreign direct investments were formed, public monopolies
were abolished and service sectors were developed. In this reforming phase of
India, the economy faced tremendous growth and became the second fastest
growing economy in the world. It also increased the GDP growth rate, per-capita
income, standard of living and industrial development. These reforms helped the
Indian economy in purchasing power and exchanging rates.


Banking systems and stock markets helped in reducing the poverty and level and
increased the economic growth. The government employed a credit rationing
policy favoring certain priority sectors with loans at subsidized interest
rates. The MRTP Act (Monopolies and Restricted Trade Practices Act) managed in
controlling the private investments and its scale of operation. The Capital
Control Act regulated securities market to determine the procedure of raising
money according to instruments. In Pre 1990s, The RBI conducted foreign
exchange transactions with no other intermediaries in the foreign market. The
reforms ensured the growth of the Indian financial sector that will culminate
in a strong and transparent system.


Before 1992, the
government had the direct control over the capital markets, after that period,
SEBI (Securities Exchange Board of India) took over the control of capital
markets in India. The Securities Exchange Board of India enhanced new
regulatory frameworks to strengthen the protection of investors. In 1993, India
began to use Global Depository Receipts (GDRs). This opened the capital market
to Foreign Institutional Investors (FIIs) and Indian companies to raise capital abroad by issue of equity.