##90 fy2000 fy2015 0. 0 0. 4 0. 8 1. 2 1. 6 2. 0 2. 4 competition index ( p - mc ), % pts 0. 0 0. 4 0. 8 1. 2 1. 6 2. 0 2. 4 competition index ( p - mc ), % pts note : 1. z - score is an indicator that measures a financial institution's business stability and is defined as the ratio of a financial institution's lossabsorbing capacity to the volatility of profits. 2. the left - hand chart shows the cumulative effects of markup ( p - mc ) changes on the z - score, by using the following estimated equation : z - score = ( 30. 18 × ( p - mc ) － 11. 52 × ( p - mc ) 2 ) / ( 1 － 0. 84 ). 3. the shaded area indicates the range over which a decline in the competition index ( p - mc ), suggesting more intense competition among financial institutions, leads to a decline in the z - score and hence lowers a financial institution's business stability. 4. density in the right - hand chart is estimated by using the gaussian kernel function. 5. for details, see the april 2017 issue of the financial system report. natural rate of interest and deposit and lending margins chart 13 natural rate of interest and nominal interest rates decomposition of deposit and lending margins % % lending spread ( a - b ) loan interest rate ( a ) deposit spread ( b - c ) market interest rate ( b ) deposit and lending margins ( a - c ) deposit interest rate ( c ) natural rate of interest - 2 - 2 cy 85 cy 85 note : 1. loan interest rate is an average contract interest rate on short - term loans outstanding. aggregate of domestically licensed banks. market interest rate is the 1 - year government bond yield. latest data as at the july - september quarter of 2017. 2. natural rate of interest is estimated following laubach and williams ( 2003 ). latest data as at the april - june quarter of 2017. source : bloomberg ; ministry of finance ; boj. chart 14 number of bank accounts per capita : international comparison number of settlement accounts ( excluding savings accounts ) based on internationally comparable statistics 3. 5 3. 0 number of accounts ( * ) 2. 5 2. 0 1. 5 1. 0 0. 5 italy germany france u. k. netherlands belgium

the commercial banks, in terms of areas of operation. the dfis do not hold any competitive advantage over banks and hence the compulsion to tag institutions as dfis to enable them to pursue development finance, no longer exists. i feel that commercial banks are in a perfect position to fulfill the objectives which were originally intended for the dfis. 27. your institution has inherited the soul of a dfi from idbi limited. what is required is a transformation in the mindset of the employees to see through this period of transformation. i strongly believe that rather than seeking any reversal of status for your institutions as a dfi, the management and the unions of idbi bank should look ahead to the future. as responsible unions, you have a very constructive role in motivating the employees of your institution. rather than resting on past laurels, you have to gear up to face the future. the achievements over the past 50 years should only be used for drawing inspiration and motivation for the hard work that you have to do in the next 50 years. as employees, all of you have to update yourselves with the latest skills, technology, etc. to be able to deliver up to the optimum level. the management and the unions have to collectively strive to ensure that the impressive legacy that the institution has inherited is sustained even in its new avatar as a commercial bank. there is enough scope for commercial banking in the country, if the interest for new bank license despite some of the onerous requirements on capital, financial inclusion, psl is anything to go by. the need for the bank is to identify the available opportunities and apply your collective might towards attaining it. idbi is a well reputed brand which does not need any introduction. going forward, you must look to leverage upon your brand and broaden your customer base before new banks poach them. 28. you may have to unlearn and relearn few new things to succeed in the even more competitive business environment that is likely to unfold shortly. it is imperative for the top management and for the employees to work collectively for the progress of your institution. i am sure the able leadership of the united forum of idbi officers and employees would ensure that the staff is motivated to handle new challenges and the institution can retain its glorious tradition in perpetuity. 29. i thank you for inviting me on this occasion and giving me a patient hearing. i wish you all the very best for all your future endeavors. bis central bankers