The banking sector faces a number of challenges -- but the challenges of tomorrow cannot be fought with the instruments of yesterday, he said. Rangarajan said that banks have to learn to swim in the stormy seas of competition, away from the sheltered waters of protection to which they have been to used to.

The soundness of the financial system has acquired a critical significance in the context of the east Asian crisis, Rangarajan said.The financial sector reform is not a discreet event. It is a process which will gather further momentum in the coming years.

The Indian banking system has made rapidstrides in the last three decades. However, concerns have been expressed from time to time on the viability of the banking system in general and, more particularly, of public sector banks and the deterioration in the quality of customer service, he said. In the recent months, the monetary policy has shown how effectively certain short-term fluctuations can be taken care of.

Speaking on the occasion, Ahmadi said that the country's economic policies have completely misfired and need to be rectified urgently. Delivering the Bank of India foundation day lecture, eminent economist PR Brahamananda said that the Indian system has become very inflexible from the monetary and fiscal angle.

In the event of a global depression, India's hardships will be more severe than those of other countries, he said. ``We are blindly marching forward to a crisis whose dimensions we are completely unaware of. Only divinity can bale us out, since policymakers and politicians do not want to even beyond the immediate morrows,'' hesaid. India is in a peculiar disadvantage as it cannot bring down the real wage rates of organised labour. Consequently, employment and its growth in the organised sector will be adversely affected. This may affect the unorganised sector as well, he further said. ``We may be caught in the vortex of competitive depreciations,'' he added.

RA Mashelkar, director general of Council of Scientific and Industrial Research, received the award for management, Krishna Baldev Vaid for literature, Sarati Joshi for music and Malini Parthasarathy, executive editor of The Hindu for media.