- RBI plays a crucial role in regulating banking reforms.
- It is the primary agency for banking system regulation.
- Examples of Post-1991 Reforms:
- Deregulation of Interest Rates: Gradually deregulated interest rates.
- Prudential Norms: Prescribed norms like asset classification, income recognition, provisioning, capital adequacy (Basel norms).
- New Bank Licenses: Granted licenses to new private banks.
- Regulatory Framework: Established SEBI (statutory powers in 1992) for capital markets.
- Foreign Exchange Management Act (FEMA) 1999: Replaced FERA 1973.
- Monetary Policy Framework Agreement (2015): Focused on price stability.
- Monetary Policy Committee (MPC) (2016): Determines policy rate.
- New Lending Rate Methodologies: Introduced MCLR (2016) and External Benchmark Rate (2019).
- PCA Framework: Introduced for banking discipline.
- New Bank Categories: Licensed Payment Banks and Small Finance Banks.