Introduction - Financial Sector Overview Indian Financial Sector is a well-diversified arena undergoing high growth and development. India's financial sector consists of commercial banks, insurance companies, non-bank cooperatives, pension and mutual funds, and many other financial institutions serving the Indian economy. However, the financial sector is predominantly dominated by the banking sector, where commercial banks constitute 60% of the total assets held by the financial system, followed by the insurance sector. Apart from banks and insurance companies, the financial sector also includes non-banking financial companies also known as NBFCs that operate in specialized segments of microfinance and infrastructure finance, although few of them are also licensed to accept deposits. (Secretariat) Position of the Central Bank of India (Role and Regulation): The regulation of the Indian banking system is carried out by the Reseve Bank of India. Being known as the lender of last resort, the RBI maintains supervision over the functioning of commercial banks and performs the following functions: Printing currency Government banker Supervisory powers over commercial banks Adopting both quantitative and qualitative monetary measures to ensure stability economic.Printing currency: The RBI has the exclusive authority to print currency notes and introduce them into the monetary system of the country. No other government agency has the right to print currency and hence RBI enjoys monopoly but in the interest of the nation. Banker to the Government: The RBI acts as banker to both the State and the Central Government. Just like the relationship that commercial banks have with the general public, the RBI performs the same banking function for the government in the midst of the paper crisis, the Arab Spring, the Eurozone crisis). financial crisis, now it is the Eurozone crisis and the Arab Spring (also known as Arab awakening) is the new threat to the Indian economy. Where the US financial crisis saw a record increase in customer defaults on subprime mortgages and forced foreclosures, which resulted in a decline in mortgage-backed securities, the eurozone crisis has now threatened the Indian economy in the following ways: Capital inflows from foreign institutional investors (FIIs) are characterized by high volatility Exports to Euro nations, which are India's favorite trade destination after the US, have seen a sharp decline. The fall in FII investments can at any time lead to inflationary pressures and creation of asset bubbles just like in the US in 2007. (Sriram) Secondly, the Arab swing is likely to have a profound impact on the Indian economy