in the case of residents. institutional framework • replacement of the earlier foreign exchange regulation act ( fera ), 1973 by the market friendly foreign exchange management act, 1999. delegation of considerable powers by rbi to authorised dealers to release foreign exchange for a variety of purposes. increase in instruments in the foreign exchange market • development of rupee - foreign currency swap market. • introduction of additional hedging instruments, such as, foreign currency - rupee options. authorised dealers permitted to use innovative products like cross - currency options, interest rate swaps ( irs ) and currency swaps, caps / collars and forward rate agreements ( fras ) in the international forex market. liberalisation measures • authorised dealers permitted to initiate trading positions, borrow and invest in overseas market subject to certain specifications and ratification by respective banks ’ boards. banks are also permitted to fix interest rates on non - resident deposits, subject to certain specifications, use derivative products for asset - liability management and fix overnight open position limits and gap limits in the foreign exchange market, subject to ratification by rbi. • permission to various participants in the foreign exchange market, including exporters, indians investing abroad, fiis, to avail forward cover and enter into swap transactions without any limit subject to genuine underlying exposure. • fiis and nris permitted to trade in exchange - traded derivative contracts subject to certain conditions. • foreign exchange earners permitted to maintain foreign currency accounts. residents are permitted to open such accounts within the general limit of us $ 25, 000 per year. iii. financial sector and monetary policy reforms : an assessment banking sector an assessment of the banking sector shows that banks have experienced strong balance sheet growth in the post - reform period in an environment of operational flexibility. improvement in the financial health of banks, reflected in significant improvement in capital adequacy and improved asset quality, is distinctly visible. it is noteworthy that this progress has been achieved despite the adoption of international best practices in prudential norms. competitiveness and productivity gains have also been enabled by proactive technological deepening and flexible human resource management. these significant gains have been achieved even while renewing our goals of social banking viz., maintaining the wide reach of the banking system and directing credit towards important but disadvantaged sectors of society. a brief discussion on the performance of the banking sector under the reform process is given below. spread of banking the banking system's wide reach, judged in terms of expansion of branches and the growth of credit and deposits indicates continued financial deep

and yet others with gaps or imbalances in the broader regulatory framework. however, if there is broad agreement that appropriately regulated mutual fund activity can play a large part in financial development in all its dimensions, these barriers can surely be addressed in a collaborative way between the three stakeholders – the investors, the fund managers and the regulators. bis central bankers ’ speeches