ABSTRACT
This chapter covers the Indian financial sector reforms and their evolution from the 1990s to the mid-2010s. As a consequence of successive reforms over the past 25 years, the Indian financial sector has been transformed comprehensively, but the task remains unfinished. Significant progress has been made in making interest and exchange rates largely market determined, though the exchange rate regime remains one of managed float, and some interest rates still remain administered. Considerable depth has been added to the banking sector along with new competition being introduced through new private sector banks, but public sector banks continue to have a dominant share in the market. Contractual savings systems have been improved, but pension funds in India are still in their infancy. Similarly, despite the introduction of new private sector insurance companies, coverage of insurance can expand much further, which would also provide greater depth to the financial markets. The extent of development along all the segments of the financial market has not been uniform. While the equity market is quite developed, technically its domestic investor base remains relatively shallow, and activities in the private debt market are predominantly confined to private placement and continue to be largely limited to blue-chip companies.
