Vibrant Gujarat 2013 / Destination Gujarat / Strong and Sophisticated Financial Services Sector

Strong and Sophisticated Financial Services Sector

India's financial system has kept pace with the growing needs of its corporate and retail borrowers. Interest rates are market-determined and have shown a downward trend over the last few years.
The components of the Indian banking system are:
- Scheduled commercial banks
- Urban and state co-operative banks
- Regional rural banks
- Non Banking Financial Institutions(NBFI)

Established in 1935, RBI is the central bank of the country.
It regulates and supervises the Indian financial system.
It formulates, implements, and monitors the monetary policy of the country, manages the country's foreign exchange reserves, prescribes exchange control norms to facilitate external trade and payment, and acts as a banker to the Central and State Governments.

Cooperative banks cater to the credit needs of specific communities in a region and operate in urban and rural areas.
They have been established under the respective State Co-operative Societies Acts and are administered by the state authorities. However, their banking activities come under the purview of the RBI.
Regional rural banks were established under an act of the Parliament to improve credit delivery in rural areas.
They are sponsored by the Central and State Governments and other public sector banks, in the ratio of 50:15:35.

These institutions offer enhanced equity and risk-based products.
They help in broadening access to financial services and enhancing competition and diversification of the financial sector.
The NBFI segment comprises all India and state level financial institutions, NBFCs (Non Banking Financial Corporations) which are private sector entities providing niche financial services, and primary dealers.