With globalization of the financial sector, it's time to recast the architecture of the Indian financial system.

The growth in the service sectors in the last decade has been much higher than that of manufacturing and agriculture. the share of service sector is nearly 50% of the economy during 2000-01 and it is the fastest growing sector of the economy clocking more than 8% during the period.

Four sectors namely trade, transport (other than railways), construction and hotels and restaurants constitute dominant portions of the service sector other than business and professional services. Actually, trade constitutes third largest chunk of the economy (share of 13% (in the GDP in 2000-2001) after agriculture (26%) and manufacturing (16%).

These activities are conducted by partnership/proprietorship type of organizations (non-corporate) with active involvement from members of family and community. We find that in trade the share of non-corporate sector is more than 80% and in non-railway transport it is above 75% and so is the case in hotels and restaurants. It is important to understand that corresponding proportions in developed market economies are less than 10%

The organized non-banking sector is more in asset-based lending for items like equipments, trucks etc. This is one of the major reasons for the large margins seen in trade, both wholesale and retail. For many of the Fast Moving Consumer Goods (FMCG) we find the gap between the company balance sheet figure and the street price figures to be more than 35% and one factor in this is the `open market' interest paid by the trade channels.

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