There are many challenges to the financial sector reforms such as:
Lack of Qualified Personnel
The expert knowledge is essential to provide innovative financial
services successfully. The trained and qualified personnel are lacking in this
sector. Lack of professional personnel is impeding the growth of financial
services. It is a very big challenge for the financial intermediaries. It can
be overcome by way of providing proper training to the qualified personnel.
Lack of Investor Awareness
The knowledge about the new financial products and instruments is
essential to investors for the success of innovative financial ideas. Lack of
investor awareness can be overcome by educating prospective investors through
seminars, workshops, advertisements and even through audio-visual aids.
Lack of Transparency
The traditional financial system maintains secrecy of books of
accounts. The disclosure of books of accounts is mandatory as per the
international accounting standards. Financial sector should adopt the
transparency system.
Lack of Specialization
All financial intermediaries are providing all types of financial
services and dealing in different varieties of instruments in India. Indian
financial intermediaries are losing the excellence of specialization.
Lack of Recent Data
Indian intermediaries are lacking in the field of research and
development. Proper data base is essential to take sound financial decisions.
It paves the way for growth of financial sector. Hence, the intermediaries
should concentrate on it.
Lack of Efficient Risk
Management System
The international transaction
involves lot of risk such as exchange rate risk, interest risk and economic and
political
risk. In India,the efficient risk management system is lacking. Therefore,
efficient risk management system is essential to develop the growth of
financial services sector.
The financial service sector
is facing many challenges in its attempt to fulfill the ever growing financial
demands of the economy. Some of the important challenges are:
Volatility of the market
Increasing customer expectations
Lack of technical Knowledge
Lack of Professionalism
Deficiencies in Performance appraisals
Concentration of wealth, on account of malpractices
Lack of safety
Deficiency in marketing process
Prevailing high handedness and arrogance
In the post liberalization era, the finance sector is witnessing a
complete metamorphosis. Deregulation measures have included the freeing up of
direct controls over ownership, liberalizing interest rates and credit
allocation, deregulating foreign exchange transaction controls, freeing up the
entry of new firms, and expanding and broadening the base of banking system,
both for nationals and international business ventures. At the same time, non
banking financial institutions, securities markets and money markets have
developed to mobilize and allocate savings. Experience suggests that financial
liberalization needs to be undertaken alongside macroeconomic reforms.
Conclusion