News: Financial sector plays major role in mobilisation of savings

(BL 19/02/2007) Mangalore - Financial sector played a major role in the mobilisation and allocation of savings in any economy, Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, said.

Delivering the Mangalore-based Karnataka Bank's 'Founders' Day lecture on "challenges before the Indian banking system" here, he said structural reforms in areas such as industrial and trade policy could succeed only if resources were re-deployed towards more efficient producers which were encouraged to expand under new policies.

He said the ongoing financial sector reforms programme were aimed at promoting a diversified, efficient and competitive financial condition with the ultimate objective of improving the allocative-efficiency of available resources, increasing return on in vestments and promoting an accelerated growth of the economy.

The first stage of the banking sector reform had come to an end and the country was now in the next stage of the reform and development, he said.

In the years to come, the Indian financial system would grow not only in size but also in complexity as the forces of competition would gain further momentum and the financial markets gaining greater width and depth, he said.

The thrust of the second phase of reforms would have to be on improvement in the organisational effectiveness of banks and other financial entities, he said.

The financial sector in India, as a whole, exhibited vibrancy and resilience, Dr Rangarajan said, and added that banking sector reforms were unique.