duvvuri subbarao : information technology and banking – a continuing agenda keynote address by dr duvvuri subbarao, governor of the reserve bank of india, at the banking technology awards 2008 of the institute for development & research in banking technology, hyderabad, 18 may 2009. * * * i am delighted to be here today to celebrate outstanding information technology achievements in the indian banking sector. we are all well aware of the significant contributions that indian it professionals have made in the world arena. in fact, when the phrase “ indian talent ” is used, it is often meant as a synonym for it excellence. it in the indian financial sector – the beginnings the use of technology in expanding banking has been a key focus area of the reserve bank. technological innovation not only enables a broader reach for consumer banking and financial services, but also enhances its capacity for continued and inclusive growth. there are several factors attributed to india ’ s high growth in the recent period – improved productivity, growing entrepreneurial spirit, and higher savings, to name the most important. but one factor usually goes unacknowledged – that is financial intermediation. i believe improvement in the quantum and quality of financial intermediation ranks along with other factors that i mentioned above as a key growth driver. and one of the factors that drove the improvement in the quantum and quality of financial intermediation is more wide spread and more efficient use of it. implementing it in an indian banking system dominated by government - owned banks has not been easy. in his book “ imagining india – ideas for the new century ”, nandan nilekani makes interesting references to this issue. he writes about his travels around the country in the early 1990s, speaking about the role of, what was then called in typical indian english as “ electronification ” in indian banking. after one such presentation, nandan writes, the chairman of a bank advised him to stop preaching, warning him that ( quote ), “ the unions will gherao you in your house! ” ( unquote ) nandan goes on to describe another presentation before an incredibly hostile audience, who dismissed out of hand all his ideas and suggestions. but at the end of the presentation, the union leader told him privately that both his sons were working for microsoft on software solutions. i am told that during the initial days of it implementation at the reserve bank, systems had to be smuggled into the office when “ the world was sleeping ”. happily for

the resources available to the imf, speaking of “ denaro distribuito a man bassa ”? jurgen stark spoke on a personal basis. as regards the imf resources, the ecb agrees that the imf has an essential role to play in the present circumstances to assist countries in need, and the gravity of the global situation justifies the significant increase of the resources available to the imf. these resources have to be distributed on the basis of appropriate economic policies in the borrowing countries. as regards the sdrs allocation, there is not yet an assessment of the governing council, which in any case will have to participate in the process. as a central bank we have to remain permanently alert and caring for medium and long term price stability – as mentioned in the communique of the g20. the chinese authorities have suggested a new reserve currency based on the special drawing rights of the imf, which, after all, represent a basket of currencies. the aim is to leave behind a monetary system which is too heavily focused on the dollar. what do you think of this idea? the subject of exchange rates is by definition extremely delicate. as far as convertible currencies are concerned, i will stick to the positions contained in the last g7 communique. i would only add that i warmly welcome the statements of ben bernanke, tim geithner and president obama, that a strong dollar is in the interests of the united states. in this area, it is important for all partners to be highly responsible. on the subject of the financial situation : markets have been rising over the past few weeks, as have raw materials prices. is there light at the end of the tunnel? or is it wiser to remain cautious? i have been asked this question with a certain regularity for 18 months now, both before and after 15 september 2008 when the crisis intensified as a result of the sudden failure of lehman brothers. we are experiencing a market correction that is very large, very challenging and very turbulent. it is a process that is still under way. we have to demonstrate responsibility, at the public and the private level, and we have to be ready to deal with unexpected events, which have been a characteristic of this crisis. in short, we have to remain permanently alert. it seems that the financial crisis spilled over into the economy and that this economic crisis could in turn now weigh on the financial system and on banking results, for example via an increase