Malaise of Indian Financial System

Financial crises the world over have revealed that weaknesses in financial systems and their supervision contribute to macro instability. Not only is stronger supervision necessary but the discipline of the market needs to be reinforced. Corporate governance needs to be strengthened and bankruptcy legislation made more robust. With rapid technological changes, the leaders in innovation would claim the best business. Banks and financial institutions which resist change would, like dinosaurs, become extinct. The financial system would need to be guided by three requirements, viz, transparency, rigorous norms and appropriate incentives.