s s mundra : a new banking landscape for new india keynote address by mr s s mundra, deputy governor of the reserve bank of india, at the mint ’ s annual banking conclave, 2015 on “ a new banking landscape for new india ”, mumbai, 29 january 2015. * * * 1. smt. arundhati bhattacharya, chairman, state bank of india ; smt. chanda kochhar, md and ceo, icici bank limited ; smt. shikha sharma, md & ceo, axis bank limited ; shri aditya puri, md, hdfc bank limited ; shri sunil kaushal, regional chief executive, india & south asia, standard chartered bank as also other senior members of the banking and financial sector ; members of the print and electronic media ; ladies and gentlemen! 2. at the outset, let me thank tamal and the mint management for inviting me to deliver the keynote address at the mint annual banking conclave. this event has become one of the most awaited events on the calendar of bankers. i last attended this event as a panelist in january 2014 when the topic for panel discussion was “ indian banking : a new banking landscape ” and this time it is enlarged to “ a new banking landscape for new india. ” 3. when i sat down to think about the theme of the conclave, i wondered what is new about india. is it the new political regime and consequential policy changes? is it the tag of being the new growth leader in the world economy? is it a more financially included india that is being thought about or is it a ‘ digital ’ or ‘ connected ’ india that is new. i think it is a bit of all and beyond. we all know that political stability is a necessary precursor to a sustained economic development anywhere in the world and a democratically elected government with decisive mandate is capable of launching significant pro - growth reforms. defining contours of new india 4. what are the defining contours of the new india? what are the themes that would play out over the next decade or two? to my mind, there are seven key themes which would define the indian economy and indian banking sector in the days to come. these are : • demography • urbanization • digitization • industrialization • education • inclusion and • global integration let me elaborate on a few of these in greater detail and delve upon the impact they could have on the banking system

funds at very cheap rates without needing to reach out to banks. the sustained deflationary trends in the euro area and japan portend further bouts of qes which can adversely impact the lending business of banks in the emerging markets. further, the large corporates in developed countries normally access financial markets directly for their funding requirements rather than commercial banks. hence, even while this time - specific event of qes might fade away, as indian economy and the financial markets mature, more and more large corporates could start bypassing banks for their funding requirements. ( vii ) would the pain from the loans restructured earlier return to haunt the banks? my understanding is that the prolonged global economic slowdown might have thrown off the projections made earlier at the time of restructuring the advances in the immediate aftermath of the crisis. as the moratorium period comes to a close, the banks would need to take a hard look at the techno - commercial viability of these projects and take the losses wherever the viability seems in jeopardy. timely decisions, including for recall / recovery of the loan, wherever the financial prospects are unviable, would be critical. conclusion 27. before i conclude, let me also give a perspective on the global regulatory reforms and how it might impact the indian banks. basel iii norms have been announced and set to be implemented as per the indicated timeline, with the liquidity regime already kicking in from january 1, 2015. so you are well - versed with the new regulatory phrases - leverage, capital conservation buffers, counter - cyclical capital buffers etc. the d - sibs guidelines have also been announced and the list of banks considered systemically important in the domestic context would be unveiled in august 2015. besides, being subjected to stricter capital and liquidity buffers, these banks may also be nudged to prepare detailed ‘ recovery and resolution plans ’. negotiations are also on at the financial stability board level for implementation of a tlac ( total loss absorbency capital ) framework for the banks identified as g - sibs. the essence of all the above discussion is that the banks would need to substantially augment their capital bases to stay in the business. the question is where do you find such capital? bis central bankers ’ speeches 28. i have covered much broader landscape than i had originally intended to. i believe the elite panel gathered here today would deliberate on the issues raised and also reflect on them later. i once again thank mint for inviting me and wish you all a