"The face of the Indian financial system will become totally unrecognisable in three to four years," Verma told delegates at the Euromoney conference here and added that the second phase of financial sector reforms would entail demolition of borders between different banking segments.

In the next millennium, both banks and DFIs would offer clients an "all-in-service package" which would include the entire set of banking and capital market services needed to run a project from conception to completion, the SBI chairman said.

In a short time, the Indian market would be so thoroughly integrated with the global economy that larger financial institutions will face competition from their peers across the world forcing them to providefacilities and services in ranges and at prices available elsewhere.

Though universal banking will be adopted as a strategy by bigger players in the Indian financial sector, the SBI chief said regional and niche players will not be totally eliminated and will continue to be relevant.

Many new entrants to the Indian financial sector will, however, end up only as regional and niche players though they have come in with national and international ambitions, he said.

Calling for a drastic change in the legal frame work of the financial sector, he said the legislative framework should be made supple so that financial institutions can rapidly adapt to changing circumstances.

Changes are also required in the ownership pattern of the public sector banks to achieve greater market accountability on their part. This will give them a greater degree of autonomy in their operations.

The sub-sectors of financial system viz, banking, insurance, investment banking, asset management, securities trading havetraditionally been functioning with high borders between them.

"These borders are now being gradually lowered and I expect they will disappear in not too distant future," Verma said. He said a good deal of inefficiency attached to the system is on account of inadequacies or outdatedness of laws and "there is little choice but to effect legislative changes at the earliest".