Abstract: Examines the financial sector, with the major focus being on India's banking institution. It provides a brief overview of the poor state of the banks in 1991, with the financial system on the brink of collapse. This is followed by an analysis of how the sector was renewed by banks being recapitalized and by interest rate deregulation. It also analyses problems, such as non-performing assets. It concludes with a brief analysis of other areas such as the capital market and insurance sectors.

Keywords: bank recapitalization, bank resources, banking sector, directed credit, financial liberalization, interest rates, international capital flows,