the indian economy. inter - bank turnover in the foreign exchange market has nearly quadrupled between 2000 - 01 and 2006 - 07 to rs. 840 billion. average daily turnover in the foreign exchange market ( interbank as well as merchant ) has increased from us $ 5 billion in 1997 - 98 to us $ 23 billion by 2006 - 07. the exchange rate of the indian rupee has exhibited significant two - way movements in the recent years. efficiency in the foreign exchange market has also improved as reflected in the decline in bid - ask spreads. in the government securities market, the issuance of long - term securities has enabled the development of yield curve across 30 - year maturity. in the government securities market, the drop in turnover in 2004 - 05 and 2005 - 06 could be attributed to factors such as “ buy and hold ” tendency of the participants such as insurance companies, which now hold a substantial portion of government securities, particularly those of longer maturities. furthermore, certain regulatory changes introduced in late 2004 allowing banks to hold a larger proportion of their investment portfolio in the “ held to maturity ” ( htm ) category reduced the proportion of portfolio used for trading, thereby affecting the magnitude of g - sec trading. the decline could also be attributed to the increase in interest rates over the period, which prompted banks and other players to hold rather than trade, so as to avoid trading losses. to keep the markets liquid and active, the reserve bank has recently allowed short selling in government securities among eligible participants, and trading in the “ when issued ” segment, but these facilities have not seen much activity yet. efforts are also on to increase liquidity through the active consolidation of existing securities. the derivatives market has also gained vibrancy during the last couple of years. the total notional principal amount outstanding has more than trebled between march 2005 and june 2007 led by a significant jump in interest rate related contracts. over this period, while the notional amount under interest rate related contracts quadrupled, that in foreign exchange contracts nearly trebled ( table 9 ). certain legislative changes in 2006 provided clear legal legitimacy to otc derivative contracts, which was somewhat ambiguous earlier. the government and the securities and exchange board of india along with the reserve bank are taking steps to activate the corporate debt market. as has been experienced elsewhere, among the various financial markets, the corporate debt market is indeed the most difficult to develop for a variety of reasons. the expansion of the pension fund and insurance industries will progressively result

recent years have put a premium on appropriate manpower planning and personnel development, indeed the human resource function generally. ensuring that the banks can recruit and retain appropriately qualified and experienced staff is at the heart of this challenge. this is made increasingly difficult by developments outside the financial sector and competition for key personnel even from international agencies. in india too, banks and banking have changed substantially over the years. as we view matters in retrospect, one of the major landmark events which constituted strategic inflexion points in the history of indian financial sector has been the reforms process that gained momentum in the early 1990s. these reforms have heralded a dramatic shift in the way banks functioned and operated in india. the changed overall environment and the internal compulsions to generate and sustain faster policy responses have given rise to the quest for greater efficiency and the need to reorient the banking practices. this unmistakable urgency of realigning our organizational resources has indeed altered the way we view the whole gamut of key issues relating to our human resources. in such an environment, sometimes somewhat stylistically termed as “ war for talent ”, even public sector banks can perhaps no longer take a life time employment for granted. issues relating to how to attract talented people, how to nurture them, how to develop them and give them the necessary space have now, therefore, moved to the centre stage and today constitute the major concerns that we may need to address adequately in the near and medium term. while these issues have always been important, it is just that the imperatives to address them squarely in substance were never so compelling. there have been broadly three catalytic forces that have brought about this changed perception of human resources : first, as the widespread use of the personal computer and the advent of the internet in the 1990s attained a critical mass, it marked a specific game - changing point which ushered in the information age. in this age, the intangible assets such as intellectual capital and talent have in a sense supplanted hard assets of the industrial age such as capital, factories and inventories. the new reality is that people are increasingly the principal assets of any organization and institutions are dependent not just on the sum total of their individual human capital, but also on how effectively they are able to draw out the best from their talent bank. secondly, in india as elsewhere, a host of new industries, some sector - specific like new generation indian private sector banks and foreign banks and other sector - neutral like companies in the fields of