Vol. 5, Issue 5, Part D (2019)

Abstract
The banking and financial system experienced an extraordinary expansion as a result of this societal transformation process. However, a number of factors, including a regulated business environment, poor credit portfolio quality brought on by social lending without adequate default protections, thin margins on social lending, disruptive trade union tactics, an increase in loss-making branches as a result of careless branch expansion in rural areas, and other factors, led to the sacrifice of these organisations' operational productivity and profitability as well as the quality of their services. Due to the highly controlled business climate, which eliminated any opportunity for bank rivalry, the banks were nonetheless able to survive. Because of the country's strong liquidity, shifting demographics, fluctuating interest rates, and rising consumer credit demand, the banking sector in India has recently experienced rapid growth. A quick examination of the Indian banking sector will reveal the causes of the current situation, which is controlled by the 1949 Banking Regulation Act of India. Non-scheduled banks and scheduled banks are the two basic categories into which the Indian banking sector can be divided. Commercial banks and cooperative banks are included in the list of scheduled banks. Commercial banks are further divided into nationalised banks, banks owned by the State Bank of India and its affiliates, regional rural banks, and private sector banks based on ownership.