profit to assets of scbs remained in the range of 0. 47 to 1. 13 during the period 1995 - 96 to 2005 - 06. the impact of greater competition and improved efficiency of the indian banking system could also be seen from the significant reduction in interest spread over the reform period. one of the major objectives of banking sector reforms was to enhance efficiency and productivity through increased competition. that the competition has intensified could be gauged from the decline in the share of public sector banks in the total income, expenditure and assets of the commercial banking system since the mid - 1990s, and increase in the share of new private sector banks ( table 3 ). comparison with other countries several balance sheet and profitability indicators suggest that the indian banking sector indicators are moving towards global benchmarks ( table 4 ). ( ii ) resolution of npas the narasimham committee i had suggested the creation of an asset creation fund to which the public sector banks would transfer the non - performing assets with certain safeguards. after deliberations it was decided not to adopt this approach. instead banks were required to deal with all the non - performing assets themselves and it is clear from the performance indicators above that this strategy has been effective. fiscal support has not been burdensome and legacy problems such as non - performing loans have been absorbed by banks and not transferred to fisc. although subsequently the government passed a legislation to create a new category of companies called asset reconstruction companies, it must be noted that these entities are private commercial entities and work on a commercial basis to deal with distressed assets. these institutions as well as guidelines that permit banks to purchase and sell npas and the corporate debt restructuring mechanism have enabled banks to deal with the " flow " and not merely the stock of npas. these measures enable the banks to deal with the npas on an ongoing basis. ( iii ) ownership structure since public sector banks could divest only by accessing the stock markets except for a few banks all the others are now listed on the stock exchanges. the government holding in these banks range from 51 percent ( obc, dena ) to 76 percent ( bom ). of the privately held equity, significant portion ( 15 to 20 percent ) was held by foreign investors in quite a few public sector banks as on 30 september 2006. all new private banks are listed and there is considerable foreign investment ( both fdi and fii ) in these banks. in five of the existing eight banks foreign shareholding had crossed 50 percent.

shyamala gopinath : special features of financial sector reforms in india inaugural address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the 18th annual national conference of forex association of india, bangkok, 6 april 2007. * * * ms. nitaya pibulratanagit, asst. governor bank of thailand, mr. appiah chairman forex association of india, mr. lamba secretary forex association of india, delegates from india and asia / middle east, ladies and gentlemen. it is a pleasure to inaugurate the 18th annual conference of the forex association of india which is affiliated to aci in this historical city of bangkok. i understand fimmda had held a similar conference in bangkok in 2003 which was inaugurated by my senior colleague dr. rakesh mohan. india and thailand share a close association dating back to many centuries, which continues even in the present times, both culturally as well as economically. the past few years have witnessed increasing economic and commercial links and the signing of a number of agreements leading to a further intensification of relations. the economies of the asian region are emerging as the new engines of growth in the global economy and i am sure in this year ’ s conference many speakers will focus on the theme of the conference. for my address today, i intend to reflect upon the special features of financial sector reforms in india since the initiation of the reform process in early nineties covering banking sector and financial markets and certain actions taken and contemplated. there have been innumerable evaluations of the financial sector reforms undertaken by india, some of which critical of the pace but the results achieved are acknowledged by all. it is important to understand and appreciate the circumstances under which the entire process was guided through balancing the given systemic imperatives with the need for bringing about changes in a non - disruptive manner. financial sector reforms in india introduced as a part of the structural adjustment and economic reforms programme in the early 1990s have had a profound impact on the functioning of the financial institutions, especially banks. the principal objective of financial sector reforms was to improve the allocative efficiency of resources, ensure financial stability and maintain confidence in the financial system by enhancing its soundness and efficiency. at the same time, reforms were also undertaken in various segments of financial markets, to enable the banking sector to perform its intermediation role in an efficient manner. with a view to making the reform measures mutually reinforcing