committee on budget, finance and administrative modernisation initial address by governor carlos da silva costa1 23 march 2017 madam chair, members of parliament, i called for this hearing following a series of reports on television about the monitoring work undertaken by banco de portugal – as supervisory authority – on banco espirito santo ( bes ) in the months leading up to its resolution in august 2014. these reports gravely misrepresented the reality of that monitoring, explicitly discrediting banco de portugal's exercise of the supervisory function. as i stated in my letter to this committee, it is my responsibility as governor of banco de portugal to defend the reputation of the institution and protect public confidence in the effectiveness of banking supervision. i see it as my duty to restore the truth behind these facts and to clarify what the reports deliberately ignore, making myself accountable to the assembly of the republic. in my view it is undeniable that, from the outset, banco de portugal was committed to being accountable to the assembly of the republic, transparently and in good time, in regard to the resolution of bes. banco de portugal actively collaborated with the parliamentary committee of inquiry in fact - checking, by providing several depositions, and an immense set of documents that was requested. 1 version prepared for presentation. www. bportugal. pt in this initial address, i see it as important to clarify three questions raised in these reports and explored intensely in the ensuing public debate. first question : why was the board of bes not removed sooner? the law assigns responsibility to banco de portugal, as supervisory authority, for assessing whether the members of the management and supervisory boards of credit institutions meet conditions of : – reputation ; – availability ; – and professional qualification, suitable for guaranteeing sound and prudent management of the credit institutions. in carrying out that function, banco de portugal permanently monitors all the information that is relevant for verifying those requirements. in the specific case of assessing the suitability of members of the board of directors of grupo bes, the note mentioned in the reports in question, dated november 2013, is part of this permanent monitoring exercise of all the relevant information, and was drafted on request of the board of directors of banco de portugal. this note involves personal information which is subject to the right of privacy and which came to banco de portugal's knowledge as a result of its supervisory function, and is thus subject to the duty of professional secrecy by law. for this reason, access to the document

credentials, university degrees, diplomas and certificates be sufficient? these questions can naturally be raised. the answer is that several aspects of banking and finance is becoming increasingly a set of specialised knowledge. as distinct from an academic perspective, a practitioner ’ s perspective is more relevant here. india is poised for growth ; along with stable growth, we will have a stable & low interest regime. this will necessitate the capital market to grow much faster and larger. the financial instruments and services that will be demanded by the investors and offered by the financial institutions users will be much more in number and in complexity. complex expertise in niche area will be the increasing need of the hour. attrition and lateral recruitments will further exacerbate this. knowledge assurance will be an imperative. customer rights and the financial institutions ’ liabilities and proof of burden will be squarely on the shoulders of the financial institutions. legal and regulatory compliance will demand another set of special talents and skills. if the banks and the financial institutions will have to meet all these challenges, they will need the assurance that their operating officials are duly qualified to undertake the respective responsibilities. and certification will provide that assurance. implementation of the recommendations 28. in so far as the implementation of the recommendations of the committee are concerned, since it involves among others, issues such as specialisation, entry point qualification, special recruitments based on job roles and competency, accreditation agency to be set up as an independent quality assurance body, national online aptitude test at entry level as well as exclusive funding arrangement under the nomenclature of the financial sector development fund with a large corpus ( to be considered by the government of india ) to support various capacity building initiatives, etc. it will have a significant bearing on the hr policies of public sector banks. in view of this, we are in consultation with the ministry of finance, government of india and the indian banks association on operationalising the recommendations. 29. while the consultation process is underway, there has been some feedback that the proposals of the report should manifest as broader guidelines for the banks ’ which are recommendatory in nature and not mandatory. while several will remain so, requirements like certification and accreditation can be mandatory. if this roundtable could discuss the suggestions and arrive at a valuable implementation road map, it would be a welcome feedback for the reserve bank as we finalise our policy on implementation of the proposals. conclusion 30. banking sector plays a very important role in the economic growth of the country and our banking system