Financial sector reform has taken a new meaning all over the world. Until the global crisis, reform of the financial sector meant deregulation. Today’s truth is that, globally, reform of the financial sector means reregulation and improving the quality as well as effectiveness of regulation. In moving forward, we must take into account both the global realities and the Indian context. In effecting change, India must be aware that (a) the financial sector and its reform is not an end in itself, (b) the risks are amplified if the reforms in the fiscal and real sectors are not in consonance with the pace of reform in financial sector regulation, and (c) the highest priority should be accorded to efficient intermediation of domestic saving and investment with a wide participation of the people of India. The three major proposals/ decisions on the financial sector announced in the Union Budget are also discussed here.