Vol. 6, Issue 1, Part C (2020)

Abstract
The need for reform or changes in the banking sector had become necessary as the financial sector, almost over the world, had changed almost unrecognizably during the 1980s. Technology – computerization and telecommunication – was a major factor that contributed to these. An important outcome of these changes was the emergence of more integrated global financial markets in the major developed economies. In the background of flexible exchange rates and convertibility that had already emerged during the 1970s. The financial flows that were generated were started with the appearance of euro-currency further changed the financial scenarios almost everywhere. The non-banking financial institutions played a major role in these changes. The effect was to blur the distinction between banks and the non-banking institutions as well as between traditional categories used within banks for internal control and management. Conventional banking functions were taken over progressively by the non-banking institutions and banks entered new areas activities that were conventionally considered out of bounds for them. In short, there was more competition at one end and more risky operations at the other. Deregulation was associated with these developments. Greater risks of the new regulation of the financial system. The emphasis that was put on transparency in financial statements and on capital adequacy of the banks is the result of these development.