India : A Financial Sector for the Twenty-First Century

Contents: I. Introduction: 1. India's financial system: getting ready for the twenty-first century: an introduction/James A. Hanson and Sanjay Kathuria. 2. Reforming India's financial sector: an overview/Montek S. Ahluwalia. II. Banking and financing of firms: 1. Indian banking: preparing for the next round of reform/S.S. Tarapore. 2. India's banking sector: current status, emerging challenges and policy imperatives in a globalized environment/Jayati Sarkar. 3. Regulation and supervision issues: banks and non-banks/S. Venkitaramanan. 4. Financing of Indian firms: meeting the needs and challenges of the twenty-first century/Mathew Joseph, Rupa R. Nitsure and Madan Sabnavis. III. Capital markets and pensions: 1. Developing the Indian capital market/Ajay Shah and Susan Thomas. 2. Regulation and market microstructure/P. Jayendra Nayak. 3. Restructuring pensions for the twenty-first century/S.A. Dave. IV. International issues and comparisons: 1. Eureka: capital account convertibility and the laws of flotation/Surjit S. Bhalla. 2. Banking crises: epidemic response and policy approaches/Gerard Caprio, Jr. 3. Internationalization of financial services in Asia/Stijn Claessens and Tom Glaessner. Index. "The first phase of India's financial sector reforms, focusing on the liberalization of interest rates and credit allocations, is largely complete. The essays in this volume analyse the new dilemmas arising from the expanded role of the financial sector, and proposals for the second phase of reforms. The second phase of liberalization and privatization of the real economy is essential to support the development strategy and realize the outcomes of the first phase. "The book deals with complex institutional problems and provides international comparisons. The main challenges facing India at this time are reducing the fiscal deficit, improving the credit and risk management of banks, improving systems for identifying and dealing with weak banks, developeing capital markets further, improving financial services and managing links to external capital markets. Two broad themes emerge from the discussions: an improved incentive framework that encourages individuals and institutions to gather, provide and use information for making sound decisions, will assure better allocation of financial resources and prudential regulation and supervision are needed to deal with the increasing complexity of finance while discouraging excessive risk taking.…