accident that the reserve bank of new zealand stands out as about the only central bank to publish such a path and as one of the few in which decisions are the responsibility of only one individual. sack and i found that actions, not words, dominated the policy inclination factor. however, the study was completed before the federal reserve became more explicit about future policy rates in the summer of 2003. donald l. kohn and brian p. sack ( 2003 ), “ central bank talk : does it matter and why? ” finance and economics discussion series 2003 - 55 ( washington : board of governors of the federal reserve system, november ). the unusual situation at that time shifted our assessment of the balance of costs and benefits in favor of a public statement about our expectations for the near - term path of policy. markets appeared to be anticipating that inflation would pick up soon after the expansion gained traction, and therefore that interest rates would rise fairly steeply. this expectation was contrary to our own outlook. we saw economic slack and rapid productivity growth keeping inflation down for some time. our expectations about policy also took account of the fact that the level of inflation was already low - lower than it had been for several decades. we thought that our reaction to a strengthening economy would be somewhat different this time than it had been in many past economic expansions and unlike what the markets seemed to anticipate. under most circumstances, this sort of disconnect between the central bank and the markets would not be a big problem ; we could compensate for the market ’ s tendency to raise intermediate and longterm rates unduly by keeping policy easier for longer. but with the federal funds rate already at 1 percent, our scope for that was limited ; and if the economy suffered any downward shocks, policy could reach the constraint of a zero federal funds rate, with uncertain consequences. under these circumstances, giving markets more information about our policy inclination, and thereby holding down longer - term interest rates, seemed to be the less - risky way to stabilize inflation at a reasonable level and encourage a vigorous expansion. i would judge the outcome to have been successful. we did influence rates to better reflect the actual path of policy ; economic outcomes have been good ; and, to date, our discussion of the path for rates has not constrained our actions. 3 that is partly because we have been able to pull back gradually on the degree of commitment on our near - term actions in a way consistent with incoming data and without roiling markets. as the

assessment of material risks. improving offsite capabilities and making supervision more system and process driven. illustratively, banks are required to have automated system - based asset classification with limited exceptions and tighter controls over such exceptions. 14. in october this year, rbi released daksh, a web - based end - to - end workflow application that will inter - alia facilitate better monitoring of compliance by supervised entities. offsite being data dependent, measures have been taken to strengthen the quality of data inputs. an endeavour is also being made to increase the use of advanced analytics, artificial intelligence and machine learning to assess material idiosyncratic and systemic risks so that risks can be proactively identified and mitigated. use of such techniques opens up a range of possibilities especially in monitoring and analysing unstructured data such as board notes, complaints, analyst reports, news, social media, etc. to provide leads on emerging supervisory concerns. 15. while we are strengthening offsite with greater use of sup - tech, the human element and onsite has not been forgotten. the college of supervisors has devised a bouquet of programs that caters to capacity building at all levels from foundation course for new recruits to refresher programmes for supervisors. further, a conscious attempt has been made to increase the two - way interactions with management of banks and financial institutions as well as statutory auditors to understand each other's perspective and gain an insight into various concerns. 16. these efforts are bearing fruit. today, i am happy to note that the indian banking sector is strong, stable and resilient poised to support economic growth. emerging issues 17. while we have managed to restore our financial system to health, it is not the time to rest, as challenges remain. having discussed the challenges of the last decade, i would like to discuss three emerging issues, namely, ( i ) the risks spill over from global 3 / 7 bis - central bankers'speeches events, ( ii ) the paradigm shift in banking driven by technology and ( iii ) potential use of data. a. spill - over risks from global events 18. events such as the russia - ukraine conflict reiterate the view that in today's interconnected globalised economy, no one is insulated from seemingly isolated events in a distant land. india does not have many trade linkages or dependence upon ukraine. however, we are bearing the second order inflationary effects through various transmission channels and overall global slow down