This paper outlines the need for the Banking Sector Reforms while providing an update on the major reforms undertaken in the banking sector (NCR-1: 1991; NCR-II: 1998 and The Financial Sector Legislative Reforms 2013). The major recommendations in 1991 included phased reduction in CRR, SLR and Directed credit, together with the deregulation of the interest rates and numerous other changes directed to bring in autonomy, efficiency and transparency.  In 1998, the situation was reviewed and there were the second-generation reforms.The situation on priority sector credit has been specifically analyzed vis-à-vis the reforms. If we look back, for sure lot has been gained in terms of efficiency and profitability enhancements, but the weaker sections have got left behind in the race. A thorough analysis shows that it is important not only from the social viewpoint, but also on economic considerations that the hitherto neglected lot comes within the circumference of the formal financial sector. It however needs to be emphasised that an intelligent strategy needs to be worked out so that the truly deprived sector is able to reap the benefits and the performance of the banking sector is least affected.

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Keywords: Banking Sector Reforms, Priority Sector Lending, Institutional Finance, NPA, CRR, SLR.