The government took two major steps on the financial sector front:
- One of the main objectives of financial sector reforms was to change the role of the RBI from a regulator to a facilitator of the financial system. This meant providing greater autonomy to the financial sector to make decisions on various matters without needing approval from the RBI. These reform policies also resulted in the establishment of private sector banks.
- Banks were allowed greater freedom to open new branches. They were also permitted to raise funds from within India as well as from abroad through the capital market.
