Joseph Anbarasu, Visiting Scholar, Department of Finance, Banking and

Finance, ASU

To make a historical account of Indian To make a historical account of Indian Financial system before and after liberalization;To appreciate the evolutionary process for having attained the present phase; T l t h t f th t i To evaluate each component of the system in a global context; andTo loot at your business decisions in the To loot at your business decisions in the context of prevailing financial system of a state.

Most banks were state-ownedB k i f d d Banks, pension funds and insurance companies were forced to buy State Issued bonds - primary investment.B b St k E h g Bombay Stock Exchange was closed market. Run by Brokers for the benefit of its members. There was no right governance and regulation.governance and regulation.There was no single derivative market.All financial transactions were controlled by the RBI were controlled by the RBI and Ministry of Finance

Strict entry barriers in every sub-industry

Big Villains weresub-industry.Difficult to start a bank, a mutual fund, a brokerage firm, an insurance company, a pension fund a securities

MRTP act, 1969The Capital Issues (control) act, 1947Indian Companies Act, 1956a pension fund, a securities

exchange or sub-broking firm.Foreign firms were restricted to touch any one of these

Indian Companies Act, 1956Industries Act, 1956Foreign Exchange Regulation Act, 1973

to touch any one of these partsComprehensive capital control and restrictive legislationsleg slat o sLook at a typical bureaucrats of yester years.

Male , Balding head , Ugly stained metal rimmed glasses .

Thick bushy eyebrows[Usually as a mono-brow], Mustache[See pictures], No beard., Paan Chewing [ The [ p ], , g [teeth and tongue are often discolored].

“I-don't-care-what-you-say, I'll-do-it-only-my-way” attitude.

Drinking coffee 10 times a day.

Looking for a slightest opportunity to take bribeLooking for a slightest opportunity to take bribe.

Take home salary is Rs. 5000[Official] + Rs. 25000[Bribes and Misc. tips].

Taking the rules and law by word and not understanding the true essence of it. Even though the laws usually date back to the 1850 British Colonial period back to the 1850 British Colonial period .

No respect for anyone's privacy.

Not taking anyone's ideas on improving productivity even though they are right.

Piles and piles of paper with folders and gem-clips strewn about.

A rotary dial telephone on the desk..

No air-conditioning and a ceiling fan that rotates 6 times in an hour.

Runs errands for his bosses or chats with family during Runs errands for his bosses or chats with family during work. Also misuses official equipment.

Is usually in a vital position of authority/ In a position that requires interaction with people everyday.

www.sriraminhell.com

Market drivenMarket drivenAll players with integrity and accountabilityInnovators and Creators flourishContributes favorably to the EconomyNo greedyg yGlobal but not taking external shocksState facilitates rather than suppresses

Eighteen to Three –S h d l d I d t i

Banking Regulation Act i lifi dScheduled Industries

Eight Hundred to Fifty –SSIMRTP not active

simplifiedSecurity Exchange Board constitutedForeign Exchange MRTP not active

Capital Issues Act repealedForeign Exchange

Foreign Exchange Management Act –passedCompany’s Act – subject Foreign Exchange

Regulation Act repealedInsurance, Banking Industries open its gates

Company s Act subject to scrutinyPrivate players allowed to do insurance and Industries open its gates

for Private PlayersMNC allowed

banking businessSEZs opened FDI encouraged

L d ' i k h d i dl d Lender's risk has dwindled substantially Liquidity position is improved Return is certain on his savings (either fixed or variable) Lender gets impetus to save He will get accurate He will get accurate information from specialized financial institutions. Lenders botheration with respect to selecting a prompt respect to selecting a prompt borrower is reduced

Borrower certainty in rising funds is soared He needs make less effort and minimum effort and minimum time in questing for an ultimate lender. In whatsoever fashion In whatsoever fashion he needs funds he can procure He can seek professionals and specialized assistance from specialist in the field. field.

1. Banking financial institutes (RBI, Commercial banks and co-operative banks) 2. Development banks (all India financial 2. Development banks (all India financial institutes like IDBI, IFCI) 3. Investment financial institutes (LIC,GIC,UTI, since 2000 Private insurance companies like since 2000 Private insurance companies like SunLife, Allianz Bajaj, ICICI Prudential etc. ) 4. Non-Banking financial institutes (SBI capital services, Merchant banking companies Hire-, g ppurchase companies, etc.,) 5. Postal department Financial services (Recurring deposits, NSC, KVP, Postal Life-( g p , , ,Insurance etc.).