strengthens the overall governance and control environment of the bank. one area that has come into sharper focus in the last couple of years is the control and management of internal accounts. we found certain banks having lakhs of such accounts with apparently no valid reason. some of these accounts were also used as a conduit for certain fraudulent transactions and ever - greening of loan accounts. internal accounts are high risk in nature on account of its potential for misuse. i therefore request the cfos to have them rationalised completely, bring them down to the essential minimum and exercise greater control through periodical reconciliation and a proper reporting to acb. i would also urge cfos to invest in technology and data analytics which would empower them to provide more accurate and real - time financial insights. this not only aids in strategic decision - making but also enhances the ability to respond swiftly to any issues identified during audits or supervisory reviews. role of auditors and expectations 2 / 4 bis - central bankers'speeches the primary responsibility for preparing accurate financial statements rests with the management of banks, with chief financial officers playing a pivotal role. however, the role of auditors is equally critical. all stakeholders, including regulators, investors, and most importantly, depositors, rely on the assurance provided by auditors that financial statements reflect a true and fair view of the bank's position and performance, free of material misstatements. this role becomes even more crucial in the banking sector, where trust is paramount. all of you would be familiar with the three lines of defence model. the first line of defence is line management, followed by compliance and risk management with the third line being internal audit. together they constitute the internal defence mechanism in a bank. but the fourth and most critical line of assurance for a regulator is the bank's statutory auditors. recognising the significant role auditors play, the reserve bank of india ( rbi ) has undertaken several initiatives to enhance the effectiveness of the auditing process. these include structured meeting mechanisms between supervisory teams and auditors, introducing exception reporting, streamlining processes for the appointment of auditors, and other measures designed to safeguard the independence of auditors. to facilitate better understanding, rbi has also put in place a system of sharing with the institute of chartered accountants of india, the typical reasons for divergence between audited positions and rbi observations. further, auditors have been given greater discretion to determine business coverage factoring in bank specific business and financial

target for the entire forecast horizon, apart for the last quarter of 2015 and the first quarter of 2016. it will average 2. 6 % for the three - year period from 2014 through 2017, which is well in line with the 2½ % inflation target. but the current equilibrium is fragile, the future is highly uncertain, and there are important known risks ranging from the global economy to the liberalisation of iceland ’ s capital controls. we will doubtless discuss some of these at this meeting. on 5 november, the monetary policy committee ( mpc ) announced its decision to lower the bank ’ s interest rates by 0. 25 percentage points. this was done in view of the rise in the bank ’ s real rate caused by the past few months ’ decline in inflation and inflation expectations, which has been more pronounced than previously anticipated. the rise in the real rate was greater than is warranted by the business cycle position and the near - term outlook. in other respects, for the rationale behind the decision, i refer you to the mpc statement and the speech i gave at the iceland chamber of commerce ’ s monetary policy meeting the following day. naturally, we are also ready and willing to answer your questions about both this decision and the interest rate outlook. bis central bankers ’ speeches finally, i would like to mention that the mpc has been examining its monetary policy instruments in the recent term and, although certain changes have been made, this review is still underway. according to the statement from its march meeting, the aim of this review is primarily to ensure that monetary policy instruments are optimally suited to the achievement of monetary policy objectives, given that it is also desirable that monetary policy implementation be as effective, comprehensible, and economical as possible in terms of the central bank ’ s balance sheet. we are ready and willing to answer any questions that you have on this topic. bis central bankers ’ speeches