The approach has been one of simultaneous movement on several fronts, graduated and calibrated, with an emphasis on institutional and infrastructural development and improvements in market microstructure. The pace of reforms was contingent upon putting in place appropriate systems and procedures, technologies and market practices. Initiatives taken by the Reserve Bank have brought about a significant transformation of various segments of the financial market.
These developments, by improving the depth and liquidity in domestic financial markets, have contributed to better price discovery of interest rates and exchange rates, which, in turn, have led to greater efficiency in resource allocation in the economy. The increase in size and depth of financial markets has paved the way for flexible use of indirect instruments.