You are here: Home » Budget » Economic Survey » Top Stories
Business Standard

Focus in 2014-15 was on financial sector reforms: Economic Survey

According to the survey, the reforms measure taken in the insurance sector was the promulgation of the Insurance Laws (Amendment) Ordinance 2014

IANS  |  Chennai 

Arun Jaitley
Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi.

Promulgation of the insurance ordinance, allowing banks to dilute government holdings up to 52% and launch of Jan Dhan Yojana for financial inclusion are some of the reforms undertaken by the government during 2014-15, the Economic Survey tabled in parliament on Friday by Finance Minister Arun Jaitley said.

According to the survey, the reforms measure taken in the insurance sector was the promulgation of the Insurance Laws (Amendment) Ordinance 2014, removing the archaic provisions and also allowing 49% foreign direct investment (FDI) from the current cap of 26%.
Read our full coverage on Union Budget

The ordinance also allows Insurance Regulatory and Development Authority of India (IRDAI) to effective regulation of the sector.

In respect of the banking sector, the government banks were allowed to tap the market for funds by diluting the government's stake up to 52%.

In April 2014, two applicants have been granted 'in principle' approval to set-up new banks in the private sector within 18 months.

The RBI released guidelines and invited applications for setting up payments banks and local area banks, the survey noted.

The period under review also saw the launch of the Pradhan Mantri Jan Dhan Yojana to provide universal access to banking facilities with at least one basic banking account for every household.

On the increase in the non-performing assets (NPA), the economic survey notes that as on June 2014, five sub-sectors - infrastructure, textiles, iron and steel, mining and aviation hold 54% of the total stressed advances of government owned banks. According to the Survey, the Reserve Bank of India (RBI) issued guidelines for the banks to act fast as soon as a sign of stress is noticed in loan accounts.

The RBI also tightened norms to asset reconstruction companies, increasing the minimum investment in security receipts to 15% from five%.

The central bank also issued guidelines to bring flexibility in project loans to infrastructure and core industry projects.

According to the survey, 2014-15 also saw a decline in the growth of bank credit due to high accretion of NRI deposits and also due to low deposit mobilisation.

The survey noted that the equity markets continued to do well during 2014-15 with the benchmark indices, BSE Sensex and Nifty showed a general upward trend in the current year with growth rates of 29.9% and 31.4% year on year.

The survey lists improvement in corporate governance norms and establishment of a foreign portfolio investor for better functioning of both primary and secondary markets.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, February 27 2015. 14:06 IST
RECOMMENDED FOR YOU