Volume : 3, Issue : 6, June - 2014

Impact of Interest Rate on Nationalised Bank and Their Investors: A Study with Respect to Indian Banking System

Prof. Prashant Vijaysing Patil, Dr. Devendrasing V. Thakor

Abstract :

The objective of creating a large financial, especially banking, network was satisfied by the 1980s. Post–nationalisation, banking in India acquired a oad mass base and emerged as an important instrument of socio–economic change. By its worst in 1991 statutory stipulations came to account for as much as 63.5 per cent of the deposit mobilization by the banking system, further limiting the scope for portfolio optimization by the banking system. Furthermore, the imperative of maintaining low interest rates in order to contain the interest rate cost of public debt and to provide concessional credit to various sectors resulted in a degree of financial repression in the economy. The Present Paper aims at offering a comprehensive perspective on central banking in India. To place the issue in context, it begins by tracing the evolution of central banking, against the backdrop of the debates in the much–contested field of monetary economics. Against this historical background, the Paper turns to three contemporary issues in central banking: formulation and conduct of monetary policy, strengthening financial stability and management of the changes in Interest rates of Reserve Bank of India.