A Status Report on India’s Financial System: A view from the Standpoint of Intermediation and Risk Bearing

The paper seeks to analyse and discuss the impact of financial reform and related institutional change on the process of financial intermediation. In effect reforms stood the earlier quantity driven model on its head. The attempt was to de-segment markets and remove asset and liability restriction of the balance sheets of financial intermediaries. Regulatory barriers to entry would be removed and markets would determine prices. Specialisation, if any, would be market driven rather than by policy design and financial intermediaries were free to use economies of scale and scope to achieve efficiency gains and improve market reach. [No. 593/ May 2006].