Joseph Anbarasu, Visiting Scholar,

Department of Finance, Banking and

Finance, ASU
€ To make a historical account of Indian
Financial system before and after
liberalization;
€ To appreciate the evolutionary process for
having attained the present phase;
€ To
T evaluate
l t each h componentt off th
the system
t iin
a global context; and
€ To loot at your business decisions in the
context of prevailing financial system of a
state.
€ Most banks were state-owned
€ B k pension
Banks, i ffunds
d andd
insurance companies were
forced to buy State Issued
bonds - primary investment.
€ B b St
Bombay StockkEExchange
h g was
closed market. Run by
Brokers for the benefit of its
members. There was no right
governance and regulation.
€ There was no single
derivative market.
€ All financial transactions
were controlled by the RBI
and Ministry of Finance
€ Strict entry barriers in every Big Villains were
sub-industry
sub-industry. € MRTP act, 1969
€ Difficult to start a bank, a € The Capital Issues (control) act,
mutual fund, a brokerage 1947
firm, an insurance company,
fund a securities € Indian Companies Act, 1956
a pension fund,
exchange or sub-broking € Industries Act, 1956
firm.
€ Foreign Exchange Regulation Act,
€ Foreign firms were restricted 1973
to touch any one of these
parts
€ Comprehensive capital
control and restrictive
leg slat o s
legislations
€ Look at a typical bureaucrats
of yester years.
€ Male , Balding head , Ugly stained metal rimmed glasses .
€ Thick bushy eyebrows[Usually as a mono-brow],
Mustache[See
[ pictures],
p ], No beard.,, Paan Chewing
g [ The
teeth and tongue are often discolored].
€ “I-don't-care-what-you-say, I'll-do-it-only-my-way”
attitude.
€ Drinking coffee 10 times a day.
€ Looking for a slightest opportunity to take bribe.
bribe
€ Take home salary is Rs. 5000[Official] + Rs. 25000[Bribes
and Misc. tips].
€ Taking the rules and law by word and not understanding
the true essence of it. Even though the laws usually date
back to the 1850 British Colonial period .
€ No respect for anyone's privacy.
€ Not taking anyone's ideas on improving productivity even
though they are right.
€ Piles and piles of paper with folders and gem-clips strewn
about.
€ A rotary dial telephone on the desk..
€ No air-conditioning and a ceiling fan that rotates 6 times
in an hour.
€ Runs errands for his bosses or chats with family during
work. Also misuses official equipment.
€ Is usually in a vital position of authority/ In a position that
requires interaction with people everyday.
www.sriraminhell.com
€ Market driven
€ All players with integrity and accountability
€ Innovators and Creators flourish
€ Contributes favorably to the Economy
€ No greedy
g y
€ Global but not taking external shocks
€ State facilitates rather than suppresses
€ Eighteen to Three – € Banking Regulation Act
S h d l d IIndustries
Scheduled d ti simplified
i lifi d
€ Eight Hundred to Fifty – € Security Exchange
SSI Board constituted
€ MRTP not active € Foreign Exchange
€ Capital Issues Act Management Act –
repealed passed
€ Foreign Exchange € Company’ss Act – subject
Company
Regulation Act repealed to scrutiny
€ Insurance, Banking € Private players allowed
Industries open its gates to do insurance and
for Private Players banking business
€ MNC allowed € SEZs opened
€ FDI encouraged
€ Lender's
L d ' risk
i kh
has ddwindled
i dl d
substantially
€ Liquidity position is improved
€ Return is certain on his
savings (either fixed or
variable)
€ Lender gets impetus to save
€ He will get accurate
information from specialized
financial institutions.
€ Lenders botheration with
respect to selecting a prompt
borrower is reduced
€ Borrower certainty in
rising funds is soared
€ He needs make less
effort and minimum
time in questing for an
ultimate lender.
€ In whatsoever fashion
he needs funds he can
procure
€ He can seek
professionals and
specialized assistance
from specialist in the
field.
€ 1. Banking financial institutes (RBI, Commercial
banks and co-operative banks)
€ 2. Development banks (all India financial
institutes like IDBI, IFCI)
€ 3. Investment financial institutes (LIC,GIC,UTI,
since 2000 Private insurance companies like
SunLife, Allianz Bajaj, ICICI Prudential etc. )
€ 4. Non-Banking financial institutes (SBI capital
services,, Merchant banking g companies
p Hire-
purchase companies, etc.,)
€ 5. Postal department Financial services
((Recurringg deposits,
p , NSC,, KVP,, Postal Life-
Insurance etc.).