shaktikanta das : banking landscape in the 21st century speech by mr shaktikanta das, governor of the reserve bank of india, at the mint ’ s annual banking conclave, 2020 on the theme “ indian banking sector : the $ 5 trillion economy challenge ”, mumbai, 24 february 2020. * * * it is indeed a matter of great pleasure for me to be here today in the annual banking conclave of the mint. i am told that this is the 13th edition of conclave in what has become a prestigious annual event attracting the best and brightest minds of the finance and banking industry. this conclave provides an important platform to all stakeholders in india ’ s financial and banking sector for assessing where we stand today and preparing ourselves for where we want to reach tomorrow. 2. several issues facing the indian banking sector have occupied the attention of policy makers in the last few years. being a regulator and supervisor of banks, the reserve bank stands committed to ensuring a sound and robust banking system in the country. emergence of new business models and new technology and its application in banking and finance have thrown up new opportunities. with the aim of taking a deeper look at india ’ s banking sector in the context of these new developments, the topic that i have chosen for my talk today is “ banking landscape in the 21st century ”. 3. finance and banking have emerged as engines of global economic growth. it is argued, and in my opinion rightly so, that technology has played a pivotal role in the proliferation of financial services1. cheques, wire transfers, atms and credit cards were important innovations of such nature. fast forward to more recent times, it seems that we are already witnessing yet another paradigm shift in banking on the back of a technological revolution that promises better customer experience, risk management and returns to shareholders2. given this environment, it becomes extremely important to understand what it entails for the banking sector and how we can prepare ourselves for the times ahead. against this background, let me now begin with discussing trends in global banking and then i shall dwell on some recent trends in indian banking, new dimensions of banking and way forward. i. global banking : emerging regulatory trends 4. the global financial crisis represents a watershed for the banking sector. it exposed the inherent vulnerabilities of an otherwise formidable international financial system. the crisis paved the way for an overhaul of the regulatory framework, long lasting changes to the economic and financial environment, and shifts in the competitive landscape of financial

duvvuri subbarao : “ central banks must distill lessons from the global crisis and make concrete reforms ” – interview in finance & development interview with mr duvvuri subbarao, governor of the reserve bank of india, in finance & development, 2 july 2010. * * * central banks have been at the heart of the global financial crisis. they have been blamed for policies and actions that got the world into the crisis ; they have been praised for leading the world out of it. both are fair assessments. central banks have been a part of the problem and a part of the solution. as the crisis unwinds and recovery takes hold, central banks face a number of issues, of which i will address five. monetary policy in a globalizing environment the crisis has demonstrated the difficulties of macroeconomic management in a globalizing world. even as governments and central banks acted with an unusual show of policy force, they were unable to get the situation under control because of the interconnectedness of the financial system and the effects, positive and negative, of external developments on domestic policy actions. most important, they found that sentiment and confidence were remarkably correlated across countries. external developments interact with the domestic economy in complex, uncertain, and even capricious ways. central banks have to deepen their understanding of these interactions. some of the channels through which cross - border transmission occurs are quite familiar – global prices, including commodity price movements ; synchronization of business cycles ; capital flows ; strong comovement of asset prices ; exchange rates of key international currencies ; and interest rate policies of major central banks. some of the transmission channels are less familiar. for example, the crisis has shown that even differences in regulatory regimes can trigger arbitrage - based action and dilute the efficiency of domestic policies. take managing capital flows. emerging market economies experienced a sudden stop in capital inflows during the crisis as well as capital outflows – the result of global deleveraging. now the situation has reversed and many emerging market economies again have net inflows. managing these flows, especially if they are volatile, will test the effectiveness of central bank policies in semi - open emerging market economies. a country whose central bank does not intervene in the foreign exchange market will incur the cost of currency appreciation unrelated to fundamentals. if central banks intervene to prevent appreciation, they will have to contend with additional liquidity and potential inflation pressures. if they sterilize