What are the tasks ahead if the Indian financial system is to improve its competitive strength substantially and strengthen itself to withstand the pressures of instability? What role should the bank economists be playing in this environment? Let me try and address a few of these issues in my remarks this morning.
A Review of Directions The significance of the financial system for an economy arises from at least three major sources. First, it performs various transformation functions relating to intermediation of funds in the economy. Secondly, it provides the mirror image of the underlying real economy and the basic macroeconomic balances. Thirdly, it is one industry whose basis of operation is underpinned in public trust.