of the bank. this is a key part of the governance structure. of course, these arrangements are not unique in any way. they are designed both to meet requirements for commonwealth authorities and also to be in line with good practice at commercial entities. they do, however, give us at the reserve bank an insight into some of the practical challenges facing other financial organisations. of particular importance to this audience, we also recognise the challenges involved with appointing, training and keeping an audit staff capable of assessing whether the controls are working as they should. our audit team has continually to improve its understanding of the breadth and depth of our business and changes to it. to help us maintain best practice, our auditors need to ensure that their technical skills remain up to speed. the iia ’ s training and certification processes play an important role in assisting this process. fostering improvements to the practice of identifying and managing risks, and to the audit processes that are an integral part of that, are central to development of policies aimed at bis central bankers ’ speeches fostering greater financial stability, both in australia and internationally. the financial stresses of the past few years have placed much greater emphasis on this aspect of our policy work in the reserve bank. there are few signs that the additional focus is going to lessen any time soon. if anything, it will increase. domestically, we have worked closely with the other members of the council of financial regulators on a number of initiatives including the financial claims scheme, the structure of financial market regulation and the role of central counterparties in the settlement of securities and derivatives transactions. internationally, through our membership of the financial stability board, the basel committee on banking supervision and the g - 20, along with colleagues in apra and the treasury, we have been involved in efforts to strengthen the international financial architecture, the rules governing the risks to which financial institutions are exposed and the buffers they are obliged to maintain in case things go wrong. the implications of these initiatives on the way in which financial institutions are managed are potentially far reaching. they are also important for internal auditors, in two respects. first, they are designed to make the institutions you are working for more resilient in the face of a wide range of pressures. if the changes are made effectively, they should help you sleep a little better at night. but second, many of the changes are complex and challenging, requiring important shifts in the way institutions operate, with even more emphasis on controls focused on risk than in the past

legal and institutional changes that need to be addressed to ensure further progress in imparting competition without serious systemic implications, including ensuring availability of adequate credit to rural areas and agriculture. in fact, in the recent past, there has been a fast growth in urban banks and perhaps we should focus on the cooperative bank segment, which should get activated to serve the rural areas. fifth, improvements in transparency, disclosure standards as also accounting standards to attain the best international practices. since 1998, there have been dramatic developments in this sphere, especially in codifying the international practices and assessing the domestic standards. rbi has put out for discussion, several reports of advisory groups on a variety of standards and codes, and a road map for bringing about changes is bound to evolve out of these reports. of particular interest to iba are the reports on ( 1 ) transparency in monetary and financial policies, ( 2 ) payments and settlement system, ( 3 ) banking supervision, and ( 4 ) bankruptcy laws. these are already in the public domain through rbi ’ s website. sixth, on credit delivery systems several procedural initiatives have been taken. the two major areas that need immediate attention to ensure credit delivery are : the fast growing services sector and the critical ‘ peoples sector ’ viz. agriculture on which a large part of our population depends. seventh, improvements in financial markets. over the last three years, impressive growth can be observed in all the three segments of financial markets that are of direct concern to the rbi viz. money, government securities and forex. the markets have grown in size, depth, instruments and participants while imparting both efficiency and stability to the system. the next landmark development would be the operation of clearing corporation, an organisation being promoted by several banks. a successful operation of the clearing corporation would inter alia help quicker forex settlement, enlargement of repo market and retailing of government securities market. the finance minister in his budget speech has set a clear timetable in this regard. there are some developments in the financial sector, which had not been flagged a few years ago but have received attention recently. first, changes in deposit insurance that have been proposed by rbi to government. second, establishment of a regulations review authority to review procedural requirements. as iba is aware, master circulars have replaced hundreds of earlier circulars and these will be updated annually. third, setting up of credit information bureau in which some members of iba had taken initiative. fourth, banks ’ foray into insurance business