A Study on Advances by Scheduled Commercial Banks

Indian banking sector, which withstood the turmoil of the global financial crisis during 2008-09, started showing some signs of stress during the subsequent period. Performance of Indian banks during the post-crisis period was conditioned to a large extent by fragile recovery of the global financial markets as well as a challenging operational environment on the domestic front, with high inflation and muted growth performance. Bank lending was the principal focus of monetary policy under the credit planning approach adopted in 1967-’68. However, in the wake of banking sector reforms, various restrictions on banks’ balance sheet were withdrawn and direct credit controls largely dismantled, though in a phased manner. Directed investments were also reduced to a significant extent. The system of administered lending rates was also dismantled and various other restrictions on banks’ lending were gradually removed in order to enable banks to operate in a flexible manner. This leads to a structural transformation in the lending and investment operations of the banks. In this backdrop, the researcher has undertaken the research work on “A Study on Advances by Scheduled Commercial Banks”.