For a country like India, where social obligations are still not fully met, some sort of regulation or control is indispensable, and hence, it is advisable to have partial governmental control of PSBs instead of giving them full autonomy.

The development of the banking system is always associated with the contemporary changes in the economy. The Indian banking industry has undergone a metamorphosis in the last two decades due to changes in the political, economic, financial, social, legal and technological environments. From the traditional brick-and-mortar banking system to the modern click-and-portal banking, Indian banking industry has traveled a long distance covering lot of crucial grounds and changes. The banks are now moving towards universal banking concepts, while adding new channels and a series of innovative product offerings catering to various segments at an attractive price.

The blueprint for banking sector reforms was the 1991 report of the Narasimham Committee. The report was the basis for the strengthening of prudential norms and the supervisory framework. While liberalization should entail further elements such as institution building and privatization of state-owned banks, the removal of repressionist policies was certainly an important step towards more market-oriented banking.

The boards of public sector banks today enjoy freedom to carry out their functions efficiently without much impediment, subject to statutory requirements, government policy prescription and regulatory guidelines issued by RBI from time to time. The banks are allowed freedom of action in the following areas:

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