Taking heed from the Lehman Brothers collapse, the Indian policymakers have started working on financial sector reforms.

The High Level Co-ordination Committee on financial Markets (HLCCFM), represented by all financial regulators and finance secretary is preparing a paper that will delineate the mechanism to ensure financial stability in India. The committee is chaired by the RBI governor. It has the finance secretary, heads of Securities Exchange board of India (Sebi), Pension Fund Regulatory and Development Authority (PFRDA), and Insurance Regulatory and Development Authority (IRDA) as its member.

This paper would also look at conglomerate or multi product financial service providers as these pose a greater threat to the Indian Financial System. A senior finance ministry official said that the paper was expected to be ready within two months.

The panel is also examining the regulatory framework and operations of credit rating agencies and is likely to come out with a report on that within 3-5 months.

The policymakers feel that the Systematically Important financial institutions (SIFIs) need to be tackled in a way that does not pose any risk to the financial system at any point of time.

These reforms are essential as per the Prime Minister Manmohan Singh's Agenda for the next generation financial sector reforms. The PM pointed out that India needs to strengthen the financial system despite the fact that the global financial crisis did not affect the Indian banking System adversely.