Indicators of financial development:

Indicators of financial structure include system-wide indicators of size, breadth, and composition of the financial system; indicators of key attributes such as competition, concentration, efficiency, and access; and measures of the scope, coverage, and outreach of financial services.

Financial structure is defined in terms of the aggregate size of the financial sector, its sectoral composition, and a range of attributes of individual sectors that determine their effectiveness in meeting users' requirements. The evaluation of financial  structure should cover the roles of the key institutional players, including the central bank, commercial and cooperative banks, development financial institutions, insurance companies, mortgage entities, pension funds, and financial market institutions such as stock exchanges etc. The functioning of financial markets, including money, foreign exchange, and capital markets (including bonds, equities, and derivative and structured finance products) should also be covered. For financial institutions, the structural overview should focus on identifying the number and types of institutions, as well as growth trends of major balance sheet  aggregates; for financial markets, a description of the size and growth trends in various financial market instruments (volume and value) would be appropriate. The overview should also reflect new linkages among financial markets and institutions that may be  forged from a variety of sources, including innovations in financial instruments, new entrants into financial markets (e.g., hedge funds), and changing practices among financial market participants (e.g., energy, power trading and investments by financial  institutions).

The overall size of the system could be ascertained by the value of financial assets, both in absolute rupee terms and as a ratio of gross domestic product (GDP). Although identifying the absolute rupee amount of financial assets is informative, normalizing financial assets on GDP facilitates benchmarking of the state of financial development and allows comparison across countries at different stages of development. Other indicators of financial size and depth that could be usefully examined include "ratios of broad money to GDP" (M3 to GDP), "private sector credit to GDP", and "ratio of bank deposits to GDP". However, one should be careful in interpreting observed ratios because they are substantially influenced by the state of financial and general economic development in individual countries.

Cross- country comparisons of economies at similar stages of development are, therefore, useful in obtaining reliable benchmarks for "low" or "high" ratios. The description of the number and types of financial  intermediaries and markets is also useful, and this information should be supplemented by information on the relative composition of the financial system. Even though many countries do have a wide range of non-bank financial intermediaries (NBFIs), banking institutions still tend to dominate overwhelmingly. In advanced markets and in many emerging markets, NBFIs, particularly pension funds or insurance companies, often play a larger part than do banks in domestic and global asset allocation (and, sometimes, in the providing of credit). Similarly, market participants such as hedge funds play an increased role in financial markets and in the performance of various asset classes. Hence, for one to get a true view of financial structure, it is useful to focus on the share of various sub- sectors (banks, non-banks, financial markets, etc.) in total financial assets by using assets of financial institutions in different sub-sectors and value of financial instruments in different markets as numerators. This type of focus on market shares enables the assessor to get a quick indication of the "effective" structure of the financial system.

In addition, the presence of large financial conglomerates - sometimes also referred to as large and complex financial institutions - in the domestic market (either foreign- owned or domestic) would warrant special attention to the scope and scale of their activities, including exposures to other domestic institutions, as well as to intra-group and cross-border exposures, to ascertain their local systemic importance.