"Past experience especially the East-Asian crisis, calls for better management of risks," World Bank and FICCI said in a joint study titled Developing Markets for Long-Term Finance.

While acknowledging India's readiness to go in for full capital account convertibility, the study said the government would have to ensure compliance of sound risk management practises before moving toward in this direction.

The government would also have to meet global standards relating to capital adequacy norms, banking supervisions and mechanism for close monitoring and regulation of short-term exposure and reduced dependence on one-way inflows, it said.

India faces three key challenges as it moves to the next generation of financial market reforms. It includes developing long-term local currency debt markets and new financial instruments to serve the needs of firms and households, World Bank acting Country Director for India Fayez Omar said.

He also said the third challenge was developing the necessary markets and mechanisms, such as derivatives and securitisation, that could enhance the risk-bearing capacity of the economy and maintain stability.

The study emphasised that sustaining the economic growth at 8 percent and making it more inclusive would depend on augmenting the supply of long-term funds, especially for the infrastructure sector.