bimal jalan : exchange rate management - an emerging consensus? address by dr bimal jalan, governor of the reserve bank of india, at the 14th national assembly of the forex association of india, mumbai, 14 august 2003. * * * i am very happy to be here with you on the occasion of the 14th national assembly. this annual gathering of our forex specialists is a very special occasion for everyone interested in the evolution of forex market in india - not only the dealers and market participants, but also the rbi, government and outside experts interested in appropriate macro - economic management for higher growth and the greater good of our people. it provides all of us with an opportunity to review recent developments in forex markets against the background of global developments in a fast changing world economic scenario and modify our own policy and approach. i am, therefore, delighted to be with you once again. as you know, rbi is in regular touch, formally and informally, with your association to review market developments. my senior colleagues and i have also benefited from your advice and, as you are aware, a large number of measures have now been put in place to liberalise our regulations in respect of foreign exchange transactions. with your permission, today, on this special occasion, i would like to deal briefly with some of the longer term policy issues in respect of exchange rate and reserves management. several of these issues have also been debated in various international fora. in the context of upsurge in our reserves in recent years and the appreciating trend in the external value of the rupee, there has also been considerable domestic discussion of these issues. you will recall that the last time i had addressed your association was in december 2000 - nearly 2½ years ago - on the occasion of the 21st asia pacific forex congress. that meeting was taking place against the background of the asian crisis in 1997 - 98. the asian region had just come out of the forex crisis of a very destabilising kind. i had used that occasion to review the on - going debate on management of the external sector, particularly the appropriate exchange rate systems, the appropriate intervention policy, and the foreign exchange reserve policy. soon after the asian crisis, these subjects had figured very prominently in the discussions on international financial architecture in various fora, such as imf, the world bank, g20, financial stability forum and the bank for international settlements. at that time, while reviewing the state of the debate, i had

explore innovative structures of loans with a greater emphasis on group lending to minimize credit risk. eighth, in any plan for financial sector development, the physical presence of a bank branch is important. hence, all the stake - holders – banks, state governments and the reserve bank – need to work in close co - ordination for increasing banking penetration and improving the quality of banking services with greater use of technology. conclusion let me conclude. goa is the richest state in india with a strong potential as reflected in the growth acceleration in the latter half of the last decade. the challenge is to sustain this momentum which will require continued policy action and greater access to the formal financial sector. bis central bankers ’ speeches