In 1991, the Indian government initiated a comprehensive market-oriented reform programme. At the core of the programme was a phased deregulation of the financial sector, along with reforms of trade and industrial policies. Important elements of the financial liberalization programme were a lifting of several interest rate ceilings in both credit and bond markets, an easing of requirements that had made it mandatory for banks to hold a part of their portfolio in non-interest-bearing reserves and low-yielding government securities, a partial dismantling of barriers to entry into the banking sector and greater freedom given to banks to close unviable branches in rural and semi-urban areas. Along with the liberalization measures was a move to introduce a regulatory mechanism that could ensure the safety and solvency of the financial sector in the deregulated environment.


Interest Rate Commercial Bank Capital Inflow Development Bank Treasury Bill 
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