The objective is to bring out the best result in terms of pricing and quality of banking services over a period of time. The third important direction of reform has been the strengthening of market institutions and allowing greater freedom to financial intermediaries.
These reforms have taken the form of gradual liberalisation of interest rates, development of money, capital and debt markets and giving operational flexibility to banks in the management of their assets and liabilities subject, of course, to prudential guidelines. In simple terms, these changes imply a greater degree of exposure of individual financial institutions to the domestic and international economic environment.