of a floor on the expected returns and venture capital investment has indeed been granted that latitude. allowing such an arrangement on a secular basis is a matter for future policy. b. it is a fair requirement that an asset must be sold at its fair value to an investor. underpricing the sale of an asset to a non - resident investor is a stratagem to dodge tax and transfer value and accordingly the regulatory framework prescribed a specific valuation methodology – the discounted cash flow ( dcf ) method – for bis central bankers ’ speeches sale of shares of unlisted companies. surely, notwithstanding its problems, the dcf method may be the most appropriate ; but with a view to affording the investors and investees greater freedom in carrying out their transactions, we have last month amended the regulations to permit any internationally accepted valuation methodology at an arm ’ s length basis. 10. as far as portfolio investment is concerned, the access to foreign investors is fairly well defined – the only constraint, consistent with the international norm, is that portfolio investment by an individual investor cannot exceed 10 % of the outstanding stock of a company and the aggregate portfolio investment cannot exceed 24 % or such higher limit as may be decided by the company concerned. this is subject to the sectoral caps, wherever applicable. earlier this year sebi has put in place a comprehensive regime for registration of potential portfolio investors, which has also been notified under fema, 1999. an important relaxation that i like to mention here is that rbi has dispensed with additional kyc requirement for a bank account that a registered foreign portfolio investor has to open for the purpose of investment. the finance minister, in his budget speech, has sought to address a long - standing demand for level playing field in respect of tax treatment of foreign funds whose fund managers are india - based. i am sure this will bring more professional employment and income to indian shores. 11. while on the subject of foreign investment, it is important to note about the proposed revamping of the regulatory framework for depository receipts. depository receipts are essentially instruments to address the home - country bias of international investing communities and over the years has proved a useful tool for indian companies to raise capital abroad. with a view to further expanding the scope of these instruments, a government of india appointed committee ( chairman : shri m s sahoo ) recently looked into the entire gamut of issues and its recommendations are being taken up for implementation. without going into details, the overar

swaminathan j : the crucial role of assurance functions in urban cooperative banks speech by mr swaminathan j, deputy governor of the reserve bank of india, at the conference of heads of assurance of urban cooperative, mumbai, 16 may 2024. * * * deputy governor shri rao, heads of assurance functions from urban cooperative banks, and my colleagues from the reserve bank of india. a very good morning to all of you. the reserve bank of india has been engaging with its supervised entities regularly over matters of governance and effectiveness of assurance functions. we have had a series of engagements with the boards of directors of both commercial and cooperative banks conveying the importance of strong corporate governance and remaining vigilant to ensure the continuing stability of the financial sector. we have also been meeting the heads of assurance functions, recognising the key role these functions play in ensuring the safety and soundness of the banks and promoting regulatory compliance. today's conference is an extension of our efforts to engage with assurance functionaries. assurance functions namely, the risk management, internal audit and compliance functions play a very crucial role, as guardians ensuring the bank operates safely, ethically and within regulatory and legal boundaries. assurance functionaries, by becoming effective gatekeepers, can give the required comfort to all stakeholders that the bank is on the right track, its systems are strong, its operations are reliable, and its risks are managed effectively. as conscience keepers of the bank, they are intended to detect and prevent any deviations or build - up of any potential risks, safeguard the reputation of the bank and help uphold the trust of its customers and other stakeholders. in the ever - changing landscape of banking, new risks constantly emerge. while traditional risks like credit, market, and liquidity risks remain significant, we now face new challenges such as cybersecurity threats and operational disruptions. the proliferation of digital technologies and the interconnected nature of financial systems have exposed banks to a myriad of cyber threats, ranging from data breaches to malicious ransomware attacks. the potential impact of a successful cyberattack on a bank's operations, reputation, and financial stability cannot be overstated, underscoring the critical importance of robust cybersecurity measures and proactive risk mitigation strategies. operational risk has also become increasingly complex and pervasive, fuelled by a variety of factors including technological advancements, outsourcing arrangements, and the associated dependencies. disruptions to critical systems and processes, whether due