exit from the quantitative easing programme that has been in existence since 2008 has not had a very adverse impact on the rupee. however, notwithstanding the recent measures and policy buffers created since last year, it is highly likely that any reversal in the interest rate trend in the us would lead to flight of capital to the so - called “ source ” countries, in the process, putting pressure on the domestic currency of the emes. 19. the wild gyrations in the forex market has the potential to inflict significant stress in the books of indian companies who have borrowed abroad as was evident during the financial crisis. this stress eventually hampers their debt repayment capability to the domestic lenders as well. it is precisely with this consideration that rbi has been advocating bis central bankers ’ speeches a curb on the increasing tendency of the corporates to dollarize their debts without adequate mitigation. 20. our inspection of banks ’ books has highlighted need for the banks to have more robust policies for risk mitigation on account of un - hedged foreign currency exposure of corporate entities. inadequacies of data further complicate the impact assessment of such exposures across the banking system. the banks have been advised to factor in this risk into their policies / pricing decision and also devise means for sharing of information on such exposures amongst themselves. regulatory guidelines have also been since issued outlining the capital and provisioning requirements for exposure to entities with significant unhedged forex exposures. v ) corporate governance 21. another area which is a major challenge, especially in the psbs, is corporate governance. some of the recent headline events have shown the psbs in poor light. as a regulator and supervisor of banks, rbi has been putting a lot of emphasis on this aspect. the p j nayak committee appointed by rbi to review “ governance of boards of banks in india ” has made certain significant recommendations like splitting the post of chairman and managing director at psbs, giving fixed five - year tenures for these posts, professionalising the boards of psbs, etc. rbi is constantly engaging with the government for the early implementation of the committee ’ s recommendations. a related concern is the impending vacuum likely to be created in the public sector banks, especially in the middle management level, due to large - scale retirement of officers in next 2 – 3 years. on our part, we have been sensitizing the bank managements to address the likely talent deficit that they would have to

in the credit intensity of agriculture as measured by the ratio of agricultural credit to agricultural gdp. the credit intensity increased from 12 per cent in the early 1970s to 67 per cent by 2010 / 11 [ chart 1 ]. between 1970s and 2010, there were, in fact, three distinct phases in the behaviour of credit intensity. the first phase from early 1970s to the mid 1980s, saw a moderate increase in credit intensity. the second phase from the mid 1980s to late 1990s saw a declining trend. this was a period when the share of institutional sources in total debt of cultivator households was also on a decline as already illustrated with the help of aidis data in table 1. by contrast, in the third phase starting 2000, there was a marked increase in the credit intensity of agriculture. source : handbook of statistics on indian economy, rbi ( 2010 – 11 ) note : since the data on agricultural credit from cooperatives were available only up to 2007 / 08, figures for the years between 2008 / 09 and 2010 / 11 are based on estimates made using the three - year moving average method bis central bankers ’ speeches ( iii ) growing share of commercial banks in total agricultural credit starting 1980s among the institutional sources of agricultural credit, cooperatives have been the oldest, and for a long time, the dominant source. starting with the nationalisation of banks, commercial banks have gradually become an important source of agricultural credit, although the growth in their share has not been monotonic [ chart 2 ]. source : handbook of statistics on indian economy, rbi ( 2010 – 11 ) note : since the data on agricultural credit from cooperatives were available only up to 2007 / 08, figures for the years between 2008 / 09 and 2010 / 11 are based on estimates made using the three - year moving average method at the beginning of the 1980s, cooperatives supplied about half of the total institutional credit while commercial banks had a share of about 40 per cent and rrbs just about 2 per cent. 4 the share of commercial banks had increased continuously through the 1980s overtaking the share of the cooperatives. this trend, however, reversed in the 1990s when the share of commercial banks declined. this is possibly accounted for by the fact that this was a period when banking penetration across the country, as measured by the number of rural branches and average population per branch, showed a fall during this period. ( iv ) sharp growth in commercial bank credit to agriculture in the 2000s the decline in the share of commercial banks in total institutional credit to