Conservatism has been the
watchword of the Indian financial system, more often than not, in terms of availability of
investible instruments and financial freedom, as compared to the
global paradigm. The regulators, be it the Reserve Bank of India (RBI), the
Securities and Exchange Board of India (Sebi), or the
Insurance Regulatory and Development Authority
(IRDA), on their part have been able to protect the system and have been by
and large successful in saving it from any major economic
crisis. Their efforts have had them labeled as
`conservative', but after the recent global financial crisis of 2008, many
have lauded their `conservative' views.
Besides preserving the financial system, our regulators have also
introduced new concepts and instruments from time to time to constantly
upgrade our financial markets and systems. For example, if we look at the stock
markets, we have come a long way from the open outcry system that we had till
the early 1990s, post which the National Stock Exchange introduced
screen-based trading. We later saw electronic trading being introduced as a result
of dematerialization, which transformed the physical shares into electronic
form. Sebi also continuously brought down the settlement time from two weeks
in the early 1990s to two days now. We also saw the introduction of
various forms of derivatives, viz., futures and options in indices and stocks,
which have enhanced the acceptability of the Indian stock markets with global
participants. On similar lines, the debt and forex market too has evolved over
the years under the aegis of the RBI.
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