This article discusses domestic financial sector reforms in India since 1991. It discusses banking sector reforms at length and argues that although Indian financial markets have increased their efficiency in the postreform phase, India still needs to develop an active and more dynamic bond market and make the bankruptcy market more efficient. This article also discusses the global financial crisis of 2007-2009 and how Indian financial markets behaved during that time. This crisis was especially significant because this was the first time that a liberalized Indian financial market was facing an external shock. The article suggests that the chain of causation during the crisis was more from the real sector to the financial sector rather than the other way round (as in the United States). The article discusses what form financial regulation will take going into the future. © 2012 by Oxford University Press, Inc. All rights reserved.