principles enjoin upon the supervisors and oversight bodies to ensure an equitable and fair treatment of consumers, disclosure and transparency in product and service offerings along with promotion of financial education and awareness amongst the consumers. in this context, i would like to highlight some important aspects of consumer protection and risk management that banks need to imbibe in their business processes : bis central bankers ’ speeches • pricing of asset and liability products should be transparent and non - discriminatory. at a minimum, it must be ensured that poor do not subsidize the provision of banking services to the rich. • the business operations of banks should be customer - centric in nature. this should be reflected in all aspects of banking operations including creation of customized products and services, pricing of services, delivery channels, etc. banks should, inherently, be flexible in their operations so that they have the ability to meet the evolving stakeholder expectations. • banks should be able to appreciate the risk - return trade - off involved in various activities. the basic premise that greater return would invariably come from assumption of higher risk, needs to be appreciated and disseminated, both within the organization and to banks ’ customers. banks need to develop the ability to discern good risk from bad so that they selectively take on only those risks that are in alignment with the bank ’ s long term strategic vision. • the culture of efficient risk management needs to be imbibed in the organization ’ s ethos so that everyone from the top management to frontline managers in the field shares a common vision of risk management. a key related issue is the integrity of mis in banks. each bank claims to be oriented towards its customers. but, i have a simple poser. are the banks aware of the number of customers they have? i am not referring to the number of accounts but the actual number of customers that the bank serves across all business verticals by offering different products. moreover, most of the banks do not have a system of working out activity wise costs and returns. unless banks know the return on each and every product, they cannot arrive at a truly risk based pricing. c ) impaired assets another issue which is generating considerable concern and is likely to impact banks ’ ability to serve its stakeholders is the rising portfolio of non - performing assets ( npas ) and restructured loans. while the downturn in business environment globally and in india has contributed to this rise, we need to reflect on why our risk management practices during boom time

economic developments. interest rate reduction credit growth more investment & consumption 2 within this framework, it shall have the following tasks : … e. it shall contribute to the stability of the financial system. 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank price stability vs. financial stability current situation in switzerland 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank price stability vs. financial stability current situation in switzerland low reference rate remains necessary 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank price stability vs. financial stability current situation in switzerland low reference rate remains necessary 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank price stability vs. financial stability current situation in switzerland low interest rate environment promotes... low reference rate remains necessary •... a build - up of imbalances : 2000 : mortgage loan volume * 100 = 110 % 2017 : mortgage loan volume * 100 = 145 % gdp gdp •... risk appetite among banks 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank should the interest rate tool be used to curb excesses on the credit market? national bank act article 5 : tasks 1 the national bank shall pursue a monetary policy serving the interests of the country as a whole. it shall ensure price stability. in so doing, it shall take due account of economic developments. interest rate tool 2 within this framework, it shall have the following tasks : … e. it shall contribute to the stability of the financial system. 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank should the interest rate tool be used to curb excesses on the credit market? tinbergen rule : 1 target = 1 instrument unwelcome strong side - effects excesses only in certain segments 1 the national bank shall pursue a monetary policy serving the interests of the country as a whole. it shall ensure price stability. in so doing, it shall take due account of economic developments. interest rate tool 2 within this framework, it shall have the following tasks : … d. it shall contribute to the stability of the financial system. 1 november 2017 collegium generale | fritz zurbrugg | © swiss national bank macroprudential instruments as a target - oriented alternative to the interest rate tool tinbergen rule : 1 target = 1 instrument