DOWNFALL OF LEHMAN BROTHERS: IMPACT ON THE US AND INDIA

Financial mess has been happening in the past and will surely continue in the future too, the very magnitude of Lehman's bankruptcy was unprecedented in the history of financial markets across the world. The functioning of global economy leaves no doubt that the process of financial development and globalization is susceptible to crisis. All problems in finance and financial regulation need to be addressed at a national as well as global level to ensure that the benefits of financial developments are available to everyone and can be sustained in the long term. Hence, effective and stringent regulation of the financial system is required to ensure sustained financial development with stability. Possible lessons from the crisis for India are that it should further strengthen regulation at the systemic and institutional levels and make supervision more effective. In addition, there is also a need to improve risk management skills. Finally, it is essential that India actively pursues the challenge of financial inclusion.