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India faces significant challenges in bank supervision, hindered by excessive oversight, ineffective regulation, and overlapping jurisdictions among multiple regulators. Issues like fraud in the stock market have further complicated supervision, and contradictory directives from the RBI and cooperative society regulators exacerbate these problems. Despite these hurdles, India's economic growth is attributed to early reforms in currency convertibility and capital controls, attracting foreign direct and portfolio investments, leading to a managed float regime. Financial repression continues to linger, impacting overall stability.
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India suffers from excessive numbers of supervisions • Ineffective bank supervision • The problems of multiple regulators and jurisdiction overlap • Fraud on the stock market • The RBI & the supervisors of cooperative societies often issued counter directives
To conclude, India’s economic “miracle” was largely the results of reforms. • Currency convertibility and capital controls were reformed at early stages • External finance in the form of foreign direct & portfolio investment is being encouraged • The currency has moved gradually over the years from a sterling peg to its current regime of a managed float.
