A Critique of RBI’s Trend and Progress of Banking in India

Over the last three years, the scope of the Reserve Bank of India’s Report on Trend and Progress of Banking in India has drastically come down. Information on important aspects of the operations of commercial banks and other financial institutions is now not presented in the report. A plea is made to restore the contents of the erstwhile reports and enhance the utility of the publication with additional data fromRBI’s existing database.

The Reserve Bank of India (RBI) has a long tradition of releasing its Report on Trend and Progress of Banking in India (hereafterTPB), which is statutory and has been widely used. However, over the last three years there has been a drastic reduction of information in theTPB about essential areas of functioning of commercial banks and other financial institutions. This has undermined the utility of this prestigious publication. The main objective of this article is to highlight the loss of information in key areas, and also suggest additional tabulations and analysis for inclusion in the TPB to enhance its utility.

The article begins with financial sector reforms and the implementation of Basel norms, which prompted lending institutions to evolve strategies to hike their bottom line in a competitive environment. The resultant need to fine-tune data and analysis to reflect these developments, and the shift in the portfolio behaviour of commercial banks in particular, are discussed. Further, the move to merge the RBI’s Financial Stability Report (FSR) with the TPB in 2013–14 is also discussed. Finally, a plea is made to restore information in the TPB as well to incorporate data from RBI’s other publications, which could prove useful in understanding banking in India.