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How Indian Finance Sector has matured

I was Googling for some information on Financial regulations in India, when I chanced upon a few old news items from the early 2000's [1][2]. While reading those new items I realized how the Indian Financial sector has undergone a rapid transformation in the last decade or so.

India's financial sector has undergone a very rapid phase of transformation in the last 10-15 years. While scam ridden 90's brought in multiple regulators like SEBI and other related organizations such as NSDL and NSE, the private banks which grew brought in newer leaner ways of banking and infusion of technology - Core Banking Systems and Straight-Through-Processing.

However, it was only in the new millenium that these changes as an aggregate started hitting the psyche of the common man and the government / regulators together. This trigerred massive national level initiatives - many of these fueled by the Reserve Bank of India (RBI). Some of these were the introduction of Electronic Clearing (ECS), Real Time Gross Settlement (RTGS), and Electronic Funds Transfer (EFT).

The first phase of these changes ushered in transparancy in operations and funds movement in the country. However, speed for still lacking - for example EFT when first introduced used to take 4 days for settlement; it was also location dependent [More].

RTGS was the first exception to the speed rule - it broke barriers of money transfer for very high value transactions. Money would get transferred in a matter of hours (4 hours being max) and every day the RTGS books of all banks would close at zero balance.

The other funds transfer implementations are in their second phase now - NECS (National ECS) and NEFT (National EFT) - are unleashing a new wave of efficiency and speed in monetary transactions in the country.

While these changes look more institutional, Retail customers are getting benefited by these changes via the internet banking facilities introduced by Banks. PSU banks also, which till now have lagged behind in technology are also now implementing all these solutions and given their reach in the smallest of towns and villages - this should pave way for another rush of blood in the Indian financial sector.

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