Discuss the financial sector reforms as part of the New Economic Policy of 1991.
Financial sector reforms included the following reforms:
a) Change in the role of the RBI: The role of RBI was reduced from regulator to facilitator of the financial sector.
b) Origin of private banks: The reform policies led to the establishment of private sector banks.
c) Increase in the limit of foreign investment: Limit of foreign investment in banks was raised to 51%.
d) Ease in expansion process: Banks were given freedom to set up new branches, expand and diversify without the approval of the RBI.