Banking regulation has assumed greater significance after the global financial crisis resulting in economic slow down. The collapse of leading financial institutions like Lehman brothers and Citi group, etc. sends shock waves to the world and the faith of the common public on the banking system declined in many nations. It is a fact that, more than 140 banks were closed in the USA alone and the resultant impact on the economy was beyond imagination.

When I read the recent announcement by the US president regarding the bank plan to prevent such collapse in the future, I was convinced that the banking system will be on track if others also follow suit. The expected restriction on the exposure to various sensitive sectors like realty and prohibition to propriety trading will go a long way in binging the needed security.

It must percolate to the various nations and an international rule to streamline the financial system globally need to be arrived, to have healthy banking sector. The plan to separate the retail banking from the other lending activities must also be thought of to have better control to reduce the probability of the assets becoming toxic. Though the plan sounds a bit ambitious, it is the need of the hour as the globe is still under the process of economic recovery.