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Recent Developments in the Indian Financial System

Introduction

Since the Liberalization of 1991, the Indian Financial System has undergone a massive transformation. The pace has accelerated post-2014 with the "Digital India" push.

1. Key Developments

A. Digital Payments Revolution

  • UPI (Unified Payments Interface): A global success story. Real-time mobile payments.
  • JAM Trinity: Jan Dhan (Accounts) + Aadhaar (Identity) + Mobile (Access). Enabled direct benefit transfers.

B. Growth of Fintech

  • Rise of companies like Paytm, PhonePe, Razorpay.
  • Innovation in lending, insurance (InsurTech), and wealth management (Robo-advisors).

C. Financial Inclusion

  • PM Jan Dhan Yojana (PMJDY): Brought millions of unbanked people into the banking fold.
  • Microfinance: Growth of MFIs serving rural poor.

D. Regulatory Sandboxes

  • RBI and SEBI have set up "Sandboxes" to allow startups to test innovative products in a controlled environment before full launch.

E. Insolvency and Bankruptcy Code (IBC), 2016

  • A landmark reform to resolve bad loans (NPAs) and allow faster exit for failing firms.

F. GIFT City (IFSC)

  • India's first International Financial Services Centre in Gujarat, competing with Dubai and Singapore.

Summary

  • Tech: UPI, Fintech.
  • Inclusion: JAM Trinity.
  • Legal: IBC 2016.
  • Global: GIFT City.

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