management, governance, transparency and disclosure standards thereby enabling depositors, investors and counterparties to take a more informed decision. the intended consequences of the regulatory reform measures are all too well known to need repetition before this knowledgeable audience. bis central bankers ’ speeches unintended consequences of reforms 8. it is obvious that the new regulatory and supervisory framework that we are putting in place now have some unintended consequences that are likely to entail additional economic costs. an underlying tension around the trade - off between financial stability and economic growth persists despite impact assessment studies showing results to the contrary. i would like to touch upon some of these issues with a particular focus on the impact on emerging markets. i ) impact on gdp growth although, an ex - ante assessment of the economic impact of regulatory reforms is difficult ; studies conducted by various international agencies indicate different magnitudes of impact. the bcbs ( 2010 ) estimated that the basel iii capital and liquidity charges would reduce the steady state level of economic activity by 0. 6 per cent in total or 0. 08 per cent annually if spread over the eight year transition period. mag of bis in 2010 covered 17 industrialized countries to conclude that the lending spread would increase by 15 bps by 2015 in response to a 1 % increase in capital over 4 years. iif which took a view ( 2010 ) of europe, us & japan concluded that a 2 % increase by way of capital and liquidity would translate into increase in the lending spread by 132 basis points. another study ( 2012 – 19 ) by iif indicates a negative impact of 0. 40 %, 0. 30 % and 0. 10 % on the annual growth for europe, japan and the us respectively. while the differences in outcomes could be attributed to the differences in methodology, the direction of impact is nonetheless clear. the economies need to brace up to the fact that the new regulations would have an adverse impact on the economic growth. the combination of ( a ) increased capital requirements, particularly in the common equity element of tier 1 capital and capital buffers and ( b ) minimum liquidity requirements, are likely to reduce the return on equity for banks. it is unclear how different banks will address the situation but the options include : reduction of rates on retail deposits ; reduced staff compensation ; and increased margins on products. reduction in retail deposits rates can have two consequences. first, it can result in increased disintermediation. second, they can even affect the overall saving rate of

customer has adhered to all the risk measures prescribed by the bank, but yet unauthorised transactions have taken place in his account, should the responsibility then not be with the card issuing bank? this being the case, is the time now ripe for us to implement a zero liability policy? i leave it to the industry to debate and discuss the issue. therefore, the continuing message for us is that improving safety, security and efficiency in payment system requires coordinated and cooperative efforts from all stakeholders. together we have achieved significant milestones be it 2fa for card not present transactions or sms / e - mail alerts for card transactions etc. however, i regret to note the areas where banks are not meeting the requirements. take the example of the national electronic funds transfer ( neft ) system. neft is a panindia one - to - one funds transfer platform enabling near - real - time settlement of funds, is the major retail electronic payment system. the feature of positive confirmation to the remitter either through sms / e - mail – unique i might add, is one of its main attractions! however, a large number of customer complaints are received regarding non - receipt of confirmation sms / e - mail. the beneficiary banks which are required to send confirmation messages ( n - 10 messages ) to the originating banks are either not sending such n - 10 messages at all or they are only sending them partially. such behaviour patterns have resulted in many customer complaints and impacted the overall systemic efficiency of neft. with regard to alternate / electronic payment channels, the following issues have been flagged to us : atm “ out of order ” board being utilised as a “ cash management tool ” particularly by outsourced entities in places like university campuses which record heavy footfalls. if you chose to ignore the sign you are often in for a pleasant experience of atm actually working! on site atms following the same opening and closing timings as the attached branch! similarly there are several complaints regarding inordinate delays in crediting customer accounts and very poor or nil response from customer facilitation centres. in many instances customer accounts are credited only after rbi takes up the matter directly with banks. instances of banks not paying any penalty for delay in crediting customer accounts have come to our notice. in one instance, the bank at fault insisted that they would pay the penal interest to the customer only if rbi writes to them advising them to do so!! such aberrations need