The roots of the Indian banking industry go back to the 18th century when the first bank was established here. In 1969, the trend of nationalization of banks started and the economic reform of 1991 saw the privatization of the industry.

The sector is now mainly divided into public or private sector banks, regional banks, rural and cooperative banks. Since the scope of business is very high, foreign banks have also made their base in the country and extended their operations through robust branch network. The branches vary from retail banks, loan divisions (taking care of home loans, personal loans etc), and corporate banks (for bigger clients like other industry players).

The Reserve Bank of India is the central bank which acts as a regulator for all the other banks in India. The RBI has the sole authority to grant license, control credits, thereby functioning as a banker for all banks coming under it. The other noteworthy Indian banks are the State Bank of India which is a public sector bank, ICICI which is a private bank, IDBI, and HDFC bank. The list of foreign banks includes HSBC, American Express, ABN Amro Bank, Standard Chartered Bank etc. The presence of such a large banking network shows the pace of reforms set forth by the Indian govt. over the last decade in financial market, banking and non-banking sectors and their development.

The household income and consumption of the households in holds key to the data where results are adjusted to the household size. Different countries are using different techniques, standards and procedures for data collection and their adjustment according to their market. An income-based survey will normally show an unequal distribution as compared to the survey based on consumption. In India, due to its long history of surveys, the quality has significantly improved and updating with the time. Yet, inter- country comparisons are cautiously looked at the present moment.

The last decade has seen a sharp increase in income and consumption due to change in govt. policies towards a more economic liberalization. Many foreign companies are setting up or have already set up their bases in India and multiplying their profits due to availability of cheap labour, educated class, and easy availability of technology.

This has resulted in the appreciation of income especially for those who are living in big metropolitan cities like Mumbai, New Delhi, Bangalore, Pune, Chandigarh, Chennai, and Hyderabad etc. The present trend shows a continuous increase in household income and hence consumption which is the driving force behind India’s present growth rate of around 7.5%.

According to the global market exchange rates, India is the 11th largest economy in the world. It is also the fourth biggest by purchasing power parity or PPP. After Independence, it was in the 1990s that saw the face of Indian economy shaping for a better future.

India has become the hub of international investment which is directly effecting the employment and labour market in the country. During the last few months, when the developed countries faced the hiccups of recession, the Indian employment market was still on a hiring spree. The financial year ending is expected to push more and more people for job changes and better opportunities.

The main reason of slow growth in the first few decades after Indian independence was due extensive regulation and extreme socio-democratic policies. Public ownership, undue protection, and resistant to change made sure that the bureaucracy did not let the international players and Indian private companies spread their operations within the country. However, since the scenario has changed now, GDP is increasing slowly but steadily to reduce the fiscal deficit of the country. At 10.4% , it is estimated to be among the top five in the world.

India is world’s one of the most-populous democracy which is growing, even during the time of global recession. The year 2007 saw an increase of 9.1 % in the GDP which made it world’s number two in the economic growth. Supported by the strength of fourth largest armed forces, India is considered as a strong regional power and a potential superpower by many countries in the world.

This improved economic stability has given India an edge over international issues and global affairs, as compared to the scenarios a decade back. India also has a long history of collaboration with the numerous international organizations most notably the Common Wealth, G 20, Asian Development Bank and the United Nation. It holds a strategic position in other organizations such as IBSA Dialogue Forum, East Asia Summit, IMF, World Trade Organization and G8+5. Some of the major regional organizations it is a part of include BIMSTEC and SAARC.

Until the economic liberation of 1991, India’s global relations were guided by policies of other countries. India intentionally chose to isolate itself from the international markets to protect its interests and achieve overall self reliance. Import tariffs dominated foreign trade policies, export duties and quantitative restrictions, while direct foreign investment was controlled by upper-limit equity contribution, limited technology transfer, government approvals and export obligations. Nearly 70% of the FDI sector took 7-8 years on an average to get necessary approvals.

These tedious restrictions ensured that annual FDI averaged only around $180M during 1980s. The scenario has changed now and a large percentage of the capital flow consists of commercial investment. Since linearization, the international trade of India has seen a double fold growth and has risen to 64,000,000 crores in 2004-05.