losses more transparently and is also less procyclical than the current “ incurred loss ” approach. the expected loss approach for provisioning will make financial reporting more useful for all stakeholders, including regulators and supervisors. disclosure requirements 21. the disclosures made by banks are important for market participants to make informed decisions. one of the lessons of the crisis is that the disclosures made by banks on their risky exposures and on regulatory capital were neither appropriate nor sufficiently transparent to afford any comparative analysis. to remedy this, basel iii requires banks to disclose all relevant details, including any regulatory adjustments, as regards the composition of the regulatory capital of the bank. 3rd question : what is the additional capital that indian banks have to mobilize to conform to basel iii? what are the options for, and challenges in, raising this size of capital? 22. admittedly, indian banks already meet the minimum capital requirements of basel iii at an aggregate level, even though some individual banks may have to top up. but capital adequacy today does not mean capital adequacy going forward. currently, the bank credit – gdp ratio in india is around 55 per cent. if we want growth to accelerate, this ratio will have to go up as a necessary pre - condition. besides, as our economy goes through a structural transformation, as it should, the share of the industry sector will increase and the credit - gdp ratio will rise even further. what this means is that indian banks would have been required to bis central bankers ’ speeches raise additional capital even in the absence of basel iii. in estimating the net additional burden on account of basel iii, we have to take this factor into account. 23. what is the size of the additional capital required to be raised by indian banks? it depends on the assumption made, and there are various estimates floating around. the reserve bank has made some quick estimates based on the following two conservative assumptions covering the period to march 31, 2018 : ( i ) risk weighted assets of individual banks will increase by 20 per cent per annum ; and ( ii ) internal accruals will be of the order of 1 per cent of risk weighted assets. 24. reserve bank ’ s estimates project an additional capital requirement of 5 trillion, of which non - equity capital will be of the order of 3. 25 trillion while equity capital will be of the order of 1. 75 trillion ( table 3 ). 25. the additional equity capital requirement of the order of 1. 75

review. the new figure is expected to be announced during the 2012 budget address. f. as mentioned in the presentation, the growth in remittances is encouraging and should support consumer spending, particularly in a time of sluggish economic growth. looking ahead, we agree that it would be prudent for such funds to also be directed towards investment spending. ongoing financial literacy education by the rbf, financial institutions and others, could encourage families who are recipients of remittance funds, to invest these money in income and revenue generating activities. g. the views expressed on the effects of devaluation are noted. it is important to recognise that the positive effects of the devaluation were partially overshadowed by the downturn in global demand and the fijian economy would have been in a much worse position now without the adjustment. we continue to encourage our exports sector to take advantage of this competitive gain by producing more to then be able to export more to other countries. 4. exchange controls and other clarifications a. a statement made earlier by dr patrick regarding exchange controls needs to be corrected. the reserve bank assures all foreign investors that all funds introduced into fiji including all profits are free to be repatriated at any time. at times, the outflow is staggered for large amounts, like in the case of commercial banks. over the last 6 years, a total of $ 1. 05 billion was approved as outflows for profit remittances. b. in responding to the concerns on the compulsory surrender of foreign exchange, the exchange control act states that all foreign exchange are to be sold to a foreign exchange dealer. however, in order to cover for exchange rate risks, we have been allowing companies and businesses to hold foreign currency accounts to meet overseas payments – the total in these accounts currently stands at $ 100 million. c. regarding our foreign reserves cover, the reserve bank is now targeting 4 – 5 months of imports cover, higher than the standard benchmark of 3 months. the standard benchmark of foreign reserves is under study at the moment especially at the imf given the growing complexity of our financial system and the associated increased vulnerability factors. we are doing well and at the moment, our foreign reserves level at $ 1. 6 billion is sufficient to cover around 4. 8 months of goods and non - factor services. bis central bankers ’ speeches d. minor observation – it was noted in the first paper that we have six banks – we have four commercial banks