Financial Sector of India is intrinsically strong, operationally sundry and exhibits competence and flexibility besides being sensitive to India’s economic aims of developing a market oriented, industrious and viable economy. An established financial sector assists greater standards of endowments and endorses expansion in the economy with its intensity and exposure. The fiscal sector in India entails banks, financial organization, markets and services. The sector is classified as organized and conventional sector that is also recognized as unofficial finance market.
Fiscal transactions in an organized industry are executed by a number of financial organizations which are commercial in nature and offer monetary services to the society. Further classification includes banking and non-banking enterprises, often recognized as activities that are client specific. The chief controller of the finance in India is the Reserve Bank of India (RBI) and is regarded as the supreme organization in the fiscal structure. Other significant fiscal organizations are business banks, domestic rural banks, cooperative banks and development banks. Non-banking fiscal organizations entail credit and charter firms and other organizations like Unit Trust of India, Provident Funds, Life Insurance Corporation, Mutual funds, GIC, etc.
Financial Sector of India – Eligibility for government autonomy
Mentioned below are certain criterions that are required to be fulfilled for acquiring government autonomy in India:
· Availability of sufficient fund of up to 8%
· Accessibility of total non-performing wealth of below 9%
· Minimum net possessed funds of more than USD 2.5 million and net revenues of minimum past three years.
· Financial institutions that satisfy the abovementioned requirements will be authorized functional independence in almost all managerial areas.
Financial Sector of India – RBI guidelines for NBFC's
The Reserve Bank of India has relaxed its guidelines for the operation of non-bank finance companies (NBFCs) in India considering the various investments from the investors. It has also permitted leasing of machinery and rent-buying credit firms with endowment level rankings to avail public savings increase the maximum limit on the amount of public investments on these NBFCs that may allow and expand the closing date for observance on its norms by two years.
The fiscal competitiveness of several NBFCs persists to be of importance to the administration and reserve bank of India controllers. There is a significant merging activity in this industry as NBFCs are regulated by stringent yardsticks that are obligatory to fulfill.
In addition, India has entered into new agreements with WTO in the area of fiscal services in Geneva on December 1997.
Financial Sector of India – Chief Characteristics
Some of the major characteristics of Financial Sector of India are:
· The financial sector of India allows Most Favored Nation (MFN) reputation to all international banks and firms offering financial facilities.
· The sector has relaxed previous MFN tax exemption on banking activities
· Allows 12 new financial bank division authorizations every year to international banks, that is higher as compared to the existing 8 every year
· Raises the 10% limit of reinsurance by insurance firms in India
· Permits 51% foreign endowment in fiscal advisory, issuing, hiring, business enterprise capital, business banking and non-banking credit firms.