Nature of business scale of operation growth prospects and technology upgradation are factors affecting what
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Banks were considered as a backbone to the financial system and play an
important role in economic development of a nation. They act as intermediaries
in channelizing funds from surplus units to deficit units to the fully utilization of the
funds. An efficient banking system of nations has significant positive externalities
which increase the efficiency of economic transaction in general. There is a
major shift in banking system in the policy atmosphere after the introduction of
financial sector reform in 1992; these reforms impact the working of commercial
banks. As one of the objectives of financial sector reform was to improve the
efficiency of banking system in India economy^
The financial system's contributes to the economy depends upon the
quantity and quality of its service and efficiency with which it provides
them^.Financial System of any country consists of financial markets, financial
intermediation and financial instruments or financial products. The term "finance"
in our simple understanding it is perceived as equivalent to 'Money'. The word
"system", in the term "financial system", implies a set of complex and closely
connected or interlined institutions, agents, practices, markets, transactions,
claims, and liabilities in the economy. The financial system is concerned about
money, credit, and finance-the three terms are intimately related yet are
somewhat different from each other. Indian financial system consists of financial
market, financial instruments, and financial intermediation.
A Financial Market can be defined as the market in which financial assets
are created or transferred. As against a real transaction that involves exchange
of money for real goods or services, a financial transaction involves creation or
transfer of a financial asset. It consist of market for government securities,
corporate securities, foreign exchange, derivates, short term finance or money