##viable and loss making branches, thanks to the social banking concept thrust upon them by the regulatory authorities in 1960s. basel ii accord, capital and market discipline the most prominent on our minds in the context of banking these days, perhaps, are the implications arising out of the basel ii accord. two deserve special mention – one relates to capital and the other to market discipline. where capital is concerned, the prescriptions have ushered in a transition from the traditional regulatory and market measures of capital adequacy to an evaluation of whether a bank has found the most efficient use of its capital to support its new business mix, i. e., from capital adequacy to capital efficiency. in this transition, how effectively capital is used will determine returns on equity and a consequent enhancement of shareholder value. in effect, future plans may, therefore, include the fluid use of capital, an approach that has been called the " just - in - time balance sheet " management, in which capital flows quickly to its most efficient use. this transition in how capital is used and how much capital is needed will become a significant factor in return - on - equity strategy for years ahead and banks ’ strategic plans may be required to execute this kind of approach. the accord also has, as an underlying principle, the reliance on the market to assess the riskiness of banks. this translates into an increased focus on transparency and market disclosure, critical information describing the risk profile, capital structure and capital adequacy. besides making banks more accountable and responsive to better - informed investors, these processes enable banks to strike the right balance between risks and rewards and to improve the access to markets. improvements in market discipline also call for greater coordination between banks and regulators. india has been a participant in the international initiatives to ensure improved processes of market discipline that are being worked out in several fora, such as, the multilateral organisations, the bis, the financial stability forum, and the core principles liaison group. concurrent efforts are underway to refine and upgrade financial information monitoring and flow, data dissemination and data warehousing. banks are currently required to disclose in their balance sheets information on maturity profiles of assets and liabilities, lending to sensitive sectors, movements in npas, besides providing information on capital, provisions, shareholdings of the government, value of investments in india and abroad, and other operating and profitability indicators. financial institutions are also required to meet these disclosure norms. banks also have to disclose their total

r gandhi : targeted attacks – protection of critical infrastructure of the country and capacity building speech by mr r gandhi, deputy governor of the reserve bank of india, in the valedictory session of the 9th annual summit “ cyber & network security ”, organized by the associated chambers of commerce and industry of india ( assocham ) along with the council of europe ( strasbourg, france ), new delhi, 29 july 2016. * * * assistance provided by shri s ganesh kumar, cgm is gratefully acknowledged. 1. i am indeed glad to be present here today as we conclude the deliberations on an important topical area – pertaining to cyber security and protection of critical infrastructure from cyber threats, coupled with capacity building in this crucial area of importance. i must congratulate the organisers on having chosen the theme of this summit, given the concerns emanating from cyber security related incidents. 2. we are at a critical juncture in the world of today which is characterised by rapid advances in the use of information and communication technology and where misuse of the facilities results in erosion of public confidence apart from resulting in financial loss and disruption of normal activities. today ’ s world is witnessing the embedded use of it in almost all spheres of life ; be it in business or financial sector ; be it government or household sectors, use of ict is pervasive ; even as mundane as switching a light is today executed by use of ict ; in addition, networked devices are now the norm. new concepts such as centralised processing systems, the internet of things and mobile computing have all made life very easy ; but this also has the attendant risks, prime among which is cyber security. the financial system which is at the nerve centre of economic activity is an easy target not only because it is one of the largest users of information and communications technology but also because financial crime results in easy access to money ; this also makes it important that cyber security is given its due importance. 3. recent developments in banking as also payment and settlement systems have resulted in enhanced customer comfort and flexibility in terms of timing, location and choice of channels. these, however, also expose the customers as well as banks to risk of cyber - attacks. while the banks have better resilience in terms of risk mitigation structures and ability to absorb the losses and expenses, the customers may not be so privileged. a relatively small value fraud of a few thousands of rupees may endanger the purchase of basic needs and