Speaking on the issues of regulatory framework in financial markets and on corporate governance, the Reserve Bank chief said that more powers need to be given to Sebi, and companies need to come out with quarterly balance sheets in order to instil greater confidence in the investors.

Dispelling pessimism regarding the Indian economy, Jalan said that in spite of the crisis in south-east Asian nations and elsewhere, Indian economy has been doing comparatively better with the highest-ever foreign exchange reserves and a reasonably sound rateof growth at 5.5-6 per cent.

The failure of real economy worldwide has been due to the failure of banks to assess risk and match assets with liabilities, Jalan said. "Problems within the banking sector have a cascading effect on the industry. In order to prevent this, India needs tougher and direct financial regime and regulatory norms, which should go hand-in-hand with greater operational freedom. Indian banks will have to be better managed with greater focus on lending, particularly to small- and medium-scale industries," he said.

Dispelling the fears expressed by the development financial institutions, he clarified that universal banking does not signify the end of the road for the DFIs. "On the contrary," he added, "Specialised institutions are imperative in the current economic scenario, and long-term finance will have to be made available to them at concessional rates." Incidentally, the Reserve bank is anticipating a report on universal banking, shortly.

Speaking on the debt market, the governorsaid that India is lagging behind in developing its long-term debt market compared with international standards mainly on account of lack of innovations and transparency in attracting individual investors.

National Stock Exchange (NSE) managing director RH Patil emphasised the importance of a strong debt market for a vibrant economy and stressed on the need to bring in the institutional players to boost this market.

"An on-line, screen-based debt market for government and corporate debt is essential to develop and give depth to this market," Patil added.