Improvement in corporate governance has helped impart a high degree of financial stability. The balance sheet of the banking system has expanded at a fast pace. Since December 31, 2002 till December 31, 2005, the balance sheet has recorded a growth of 64.5%, which in all respect is quite significant. Deposits of the banking system registered unprecedented growth of 69% since 2002.
Profits of the banking system scaled new heights. Return on assets (after tax) increased to 1.9% in 2005 (and further increased to 2.1% by Sep 2006) from 0.1% in 2002. Credit activities got a tremendous boost as banks responded zealously to meet the sharp rise in demand for credit. Loan portfolio of the banking system got doubled in the last three years.