In recent times, some initiatives to liberalize the financial sector have been taken; some more measures need to be taken. In this monograph, the author discusses several measures to make the financial sector improve the economic performance of the country. These liberalization measures must bo carefully phased-out over a period of time so that there is no destabilization. Therefore, financial liberalization must be accompanied, or even preceded, by reduction in trade deficit, containment of fiscal deficit, control of inflation and improvement in legal, regulatory and accounting foundations. If these changes are not effected, financial liberalization per se may not accomplish much.