Indian banking system is operating in the environment of severe competition where only efficiency can help the banks to meet the challenges of a liberalized environment. Productivity is a vital indicator of economic performance for an economic system.

The banking sector has become the foundation of the modern economic development. Any effort to develop the economy requires an action to increase, mobilize and appropriately channelize the domestic financial resources towards productive investment in the economy. Banks play a very significant role in the economic development of a country. They have control over a major part of the supply of money in circulation. Banks mobilize the idle and dormant capital of a community and make it available for productive purposes which in turn generates income. High income leads to lucrative investments which provide optimal returns and create more employment opportunities. This leads to more consumption. More consumption leads to industrial development. Banks are the creator of money and act as catalysts in social change. Banks help in the development of the entrepreneurship, agriculture and industries.

The present scheduled banking structure has been depicted in the Figure. From the Figure, it is clear that there are 28 public sector banks operating in India apart from 30 private sector banks, 33 foreign banks and 196 regional rural banks. In addition to that there are 57 scheduled urban cooperative banks and 16 scheduled state cooperative banks. Out of the 28 public sector banks there are 19 nationalized banks, one IDBI Bank Ltd. and other eight banks are SBI and its associates. The merger of New Bank of India with Punjab National Bank in 1993-94 reduced the number of nationalized banks from 20 to 19.

Professional Banker Magazine, Public Sector Banks, Indian Banking System, Economic System, Banking Sector, Economic Development, Domestic Financial Resources, Industrial Development, Private Sector Banks, Nationalized Banks, Banking Sector Reforms, Financial Sector Reforms, Financial Services System, Capital Adequacy Norms, Asset Reconstruction Company.