’ and sound governance. the same criteria as applicable for higher level of ownership as articulated in the february 3, 2004 would form the basis for dealing with the cases under transition as well. the discussion paper is an illustration to the consultative process that has been increasingly adopted in the policy making by the reserve bank. as far as banking business is concerned, we appreciate the role of promoters in general and strategic investors in particular ; although the distinction between them is often blurred in practice. the comments on the first draft of this discussion paper will definitely enable us to fine tune the policy for the better.

and upgrading the financial infrastructure in all its vital components, such as accounting standards, including income recognition and provisioning norms, disclosure standards and insolvency laws. this upgradation is to be attained in conformity with international best practices. in this regard, the reserve bank has strengthened the consultative process for all major policy steps in a transparent manner by involving market participants and other experts. vii. concluding observations the reforms have been successful in bringing significant improvements in various financial market segments improving their depth, liquidity and efficiency. the money market is now reasonably developed with a wide array of instruments. the character of the government securities market has changed from being a captive market to a broad - based, deep and liquid market enabling the reserve bank to pursue its monetary policy through market - based instruments. various reform measures have resulted in sharp growth of the foreign exchange market. reforms have also been successful in creating and sustaining orderly conditions in the market. these factors have led to increased interlinkages across financial institutions and markets. in the more recent period, the various segments of the financial market in india have, by and large, exhibited stability. rbi will endeavour to provide an enabling environment for healthy development of financial markets. the enabling environment also encompasses harmonization of reforms in financial sector with the real sector. large gaps exist in demand supply of infrastructure services such as transport, electricity, ports etc. it needs to be emphasized that sound macroeconomic policies and a competitive domestic sector improve the capacity of the economy to absorb higher capital inflows, reduce the cost of capital, translate external flows into higher investment levels and provide cushion against unexpected shocks in more liberalized external markets. with progressive financial sector reforms, various segments of the financial market, including forex, money and g - sec markets, have made tremendous strides. while we have come a long way from the controlled regime of the yester years, we believe in following a gradualist approach to opening up. a calibrated approach towards financial sector liberalization has been the hallmark of financial sector reforms process and has paid rich dividends to the economy by insulating it from the vagaries of international capital flows and the contagion effect of various crises faced by emerging market economies in the 1990s. let me conclude by thanking the association for giving me this opportunity. i am sure the deliberations in this conference will be quite useful and i wish the conference all success. thank you. this bis review is available on the bis website at www. bis.