Appropriate governance has enabled us to mitigate areas of conflict of interest even as we have reaped the benefits of (i) a deep understanding of the dynamics of India’s financial sector – which, in essence, has evolved around the Reserve Bank over the years – (ii) oversight of money, debt and foreign exchange markets and (iii) the accumulation of the technical skills associated with regulation and supervision.
The experience with the tumultuous 1990s has shown that our approach has stood the test of time in ensuring a stable, vibrant and well-functioning financial system in the country. We have a well-capitalised financial system even by international standards, with low levels of loan delinquency despite our prudential standards being set tighter than international standards.