Solution

Prior to 1991, banking institutions were subject to too much control by the RBI through high bank rates, high cash reserve ratio, and statutory liquidity ratios.
The financial sector includes:
(a) banking and non-banking financial institutions,
(b) stock exchange market, and
(c) foreign exchange market.
In India, the financial sector is regulated and controlled by the RBI (Reserve Bank of India).
There was a substantial shift in the role of the RBI from ‘a regulator’ to ‘a facilitator’ of the financial sector. Earlier as a regulator, the RBI would itself fix the interest rate structure for the commercial banks. After liberalization in 1991, RBI as a facilitator would only facilitate free play of the market forces and leave it to the commercial banks to decide their interest rate structure.