Development of the Financial System in India: Assessment of Financial Efficiency, Stability, Regulation and Supervision Sanjoy Kumar Saha

In this paper we will analyze the efficiency and stability of the Indian financial system using several indicators from the Global Financial Development database of the World Bank. In addition, we will briefly look at the concentration and composition of the banking sector in India. Lastly, the regulation and supervision of the financial sector in India will be discussed using the 2011 Bank Regulation and Supervision Survey of the World Bank. Germany is used as benchmark country. We have found that in terms of financial institutions and markets India’s development is noticeable. Banking sector in India was more robust than that of Germany in case of gaining profit. Indian stock market is also increasing their financial efficiency. Banking sector has been supervised and regulated quite well in the last decade. But quality of assets has been deteriorating in India due to increasing non performing loans. As a result liquidity risk increased