Abstract

Financial mess has been happening in the past and will surely continue in the future too, the verymagnitude of Lehman's bankruptcy was unprecedented in the history of financial markets across theworld. The functioning of global economy leaves no doubt that the process of financial developmentand globalization is susceptible to crisis.All problems in finance and financial regulation need to beaddressed at a national as well as global level to ensure that the benefits of financial developments areavailable to everyone and can be sustained in the long term. Hence, effective and stringent regulationof the financial system is required to ensure sustained financial development with stability. Possiblelessons from the crisis for India are that it should further strengthen regulation at the systemic andinstitutional levels and make supervision more effective. In addition, there is also a need to improverisk management skills. Finally, it is essential that India actively pursues the challenge of financial inclusion.

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