It is also evident that reforms can succeed only and only if coordinated efforts are made by RBI, Government of India and banks, themselves. It must, however, be recognized that key to financial sector reform is banking reform; key to banking reform is public sector banking reform; and key to public sector banking sector reform is Government’s initiative.
The deregulation of housing and consumer finance reinforced a secular decline in private savings. Vulnerabilities grew from the combination of macro imbalances and micro failings in risk management, supervision, and financial regulation. Policy-makers in advanced economies were too slow to recognise and address the looming risks.