There is a logical linkage between economic growth and development and the structural changes in any society . With the predominance of agriculture in the earlier times which provided the sole means of livelihood, our economic structures revolved around this reality but the scenario changed quite radically when industrialization emerged and rapid urbanization started taking place. But the primacy of agriculture and industry started declining .In this evolutionary process of economic development the service sector has come to make its presence felt and the role and importance of the financial sector services has grown enormously in recent decades.


The 90s saw extraordinary development in this area which could be attributed to the some bold and much-needed reforms in restructuring our financial service sector. In the process some hide-bound rules were thrown out of the window and some holy cows were sacrificed. And finally our economy was integrated with global one. This created challenges as well as opportunities never seen before.


The importance of a well-developed financial is a prerequisite for faster economic development. The development of financial system is dependent upon economic development of the country. Think of the times some hundred years back when there were no financial instruments to bridge the savings and deficit gap and the financial instruments which came into being and in the scene later succeeded to a great extent in bridging this hiatus. as a form of direct finance .


In recent times the deficiency of direct finance has paved the way for indirect finance. When investment requires sizable funds there are practical difficulties to identify financial entities with surplus apart from the problems of negotiating a number of loans and converting direct claims and primary securities into secondary ones and here the role of “financial intermediation” becomes relevant and important. And this has necessitated the birth of financial service sector which has been providing a host of services including intermediation, dis-intermediation and re-intermediation. And the emphasis is more on customer-orientation than functional orientation.

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