9. Summary and Conclusions

Optimal banking structure defined by relative size, accessibility and outreach, and allocation of credit is evaluated from empirical data for changes consistent with dynamic needs of Indian economy during reform era. Despite significant movements on the above parameters, ideal accomplishments were far from satisfactory, and thus further reforms were needed. Reserve Bank of India imposed deregulation and prudential norms for reforming banks that have made substantial impact on banks’ balance sheet and other performance variables. Consolidation and restructuring initiatives muted by policy constraints and consequences were marginal variations in the level of concentration and competition in Indian banking. Market-oriented banking reforms contributed to performance of banks. Notable achievements were lower average cost combined with growth of total factor productivity, superior profitability and intensive advanced technology adoption. But current high non-performing assets ratio is a drag on banks’ profitability as it was the case in 1990s despite  a drastic fall in the ratio in intervening years followed by its upward trend in post-global crisis.