As a result of various reform measures, liquidity in the foreign exchange market increased by more than five times between 1997-98 and 2006-07 (Table 3). In relative terms, turnover in the foreign exchange market was 6.6 times the size of India's balance of payments during 2005-06 as compared with 5.4 times in 2000-01 (Table 4).
With the deepening of the foreign exchange market and increased turnover, income of commercial banks through such transactions increased significantly. Profit from foreign exchange transactions accounted for more than 20 per cent of total profit of scheduled commercial banks in the last 2 years.