Mature and well functioning financial system is essential for promoting savings, channeling investment into the most productive activities and ensuring an efficient payments mechanism in an economy. In India financial sector is in a process of rapid transformation. Reforms are continuing as part of the overall structural reforms aimed at improving the productivity and efficiency of the economy. The role of an integrated financial infrastructure is to stimulate and sustain economic growth. Financial innovations have changed the whole structure and functioning of financial markets. The entire range of reforms aimed at promoting competition within a prudent regulatory regime is beginning to bear fruits. The financial position of the scheduled commercial banks has improved. The numbers of private sector banks declaring operating profits are touching the sky and the response of foreign investment flows to the liberalization measures has been very encouraging over the past few years.