people and alleviating poverty, about 115 million new non - farm jobs will have to be created between 2012 and 2022 and of these, about 27 million new jobs need to be created in manufacturing. the required growth rate in manufacturing sector output needs to be at least 10 per cent a year, probably higher. the national manufacturing policy envisages share of manufacturing in gdp to 25 per cent by 2022. achieving this rate of growth would require significant amount of financing by the banks. 4. against this evolving milieu of opportunistic trends, i feel it is appropriate to take stock of the challenges facing banks going forward in terms of strategies and business models that they will need to adopt more specifically from the regulatory and payment system perspectives. i intend to highlight some of the major challenges. challenges from the regulatory perspective re - orientation of the indian banking structure 5. as the economy expands, a greater quantum of resources will be needed for supporting the growth process. the indian banking sector also needs to catch up the likely acceleration in the credit to gdp ratio as the economy expands. to support the economic growth as envisaged in the 12th five year plan, the banking business needs to expand significantly to an estimated 288 trillion by 2020 from about 115 trillion in 2012 3. given this, there is a need for reorienting the banking structure to make it more dynamic and flexible, while ensuring safety and systemic stability. there is enormous scope for increasing the size and capacity of the banking structure. accordingly, the reserve bank came out with a set of guidelines for licensing of new banks in the private sector in february 2013. the process of licensing culminated with the granting of “ in - principle ” approval to two applicants who would set up new banks in the private sector within a period of 18 months. 6. while announcing the decision to grant “ in - principle ” approval to the two applicants, the reserve bank indicated that going forward, it would use the learning experience from this licensing exercise to revise the guidelines appropriately and move to grant licences more regularly on “ tap ” basis. further, reserve bank would work on a policy of having various categories of “ differentiated ” bank licences which will allow a wider pool of entrants into banking leading to greater banking penetration and more competitive environment. reserve bank has, accordingly, been working on the relevant guidelines for licensing payment banks and small banks. 7. eventually, over the years, as visualized in the discussion paper, the reoriented the banking

cent in september 2013. the net non - performing advances ( nnpa ) as percentage of total advances, also declined to 2. 0 per cent in march 2014 from 2. 3 per cent in september 2013. this improvement in asset quality was due to the lower slippage of standard advances to nonperforming and a seasonal pattern of higher recovery and write - offs that generally take place during the last quarter of financial year. the stressed advances of scbs also declined to 9. 6 per cent of total advances as at end march 2014 from 10. 2 per cent of september 2013. this improvement in the asset quality was observed across all the bank - groups. bis central bankers ’ speeches encouraging macro - economic situation, it is expected that the implementation of the new initiatives by the central government would address these issues effectively. skeptics, though may still point out at factors, such as, the threat of “ el nino ” which could result in poor monsoon, global developments, such as, quantitative easing, etc. and geopolitical risks, could threaten the performance of banks in india. it is also true that even when general economic outlook is healthy, the asset quality of banks could still suffer due to inadequacies in credit management. there are no short cuts for proper credit appraisals and monitoring. recognising early warning signals and taking timely measures to take care of the weaknesses observed are very important. 15. the reserve bank, on january 30, 2014, has issued a “ framework to revitalise the distressed assets in the economy ”, wherein banks would recognise at an early stage the stress in their assets and take prompt steps towards resolution / recovery of distressed assets and detailed guidelines in this regard were issued on february 26, 2014. the framework has identified certain structural impediments in the way of smooth resolution / recovery of stressed assets of banks and suggested steps, such as, revamping the sarfaesi act, revitalizing drts, etc. and rejuvenating asset reconstruction companies, are also being mooted. 16. the reserve bank of india has set up the central repository of information on large credits ( crilc ) to collect, store and disseminate data on all borrowers ’ credit exposures including special mention accounts ( sma 0, 1 & 2 ) with aggregate fund - based and non - fund based exposure of ` 50 million and above. the crilc has started disseminating information on large