The document discusses various concepts related to financial sector reforms including information asymmetry, financial repression, and measures taken to reform the Indian financial system. It explains how information asymmetry can lead to issues like adverse selection, moral hazard, and credit rationing. It describes how the Indian financial system was previously characterized by financial repression through high reserve requirements, interest rate controls, and credit allocation. Financial reforms introduced prudential regulations, deregulated interest rates and capital markets, and allowed greater foreign investment to address inefficiencies and improve resource allocation.

1. Financial Sector Reforms Theory and Measures Dr. Prabhakaran Nair V.R Lecturer Department of Economics SD College

19. Reduction in Reserve requirements or pre-emptions