with regard to entry point and the regulatory and supervisory issues. competition steps have also been initiated to infuse competition into the financial system. the rbi issued guidelines in 1993 is respect of establishment of new banks in the private sector. likewise, foreign banks have been given more liberal entry. recently, the norms for entry of new private banks were rationalised. two new private sector banks have been given ‘ in - principle ’ approval under these revised guidelines. the union budget 2002 - 03 has also provided a fillip to the foreign banking segment, permitted these banks, depending on their size, strategies and objectives, to choose to operate either as branches of their overseas parent, or, corporatize as domestic companies. this is expected to impart greater flexibility in their operations and provide them with a level - playing field vis - a - vis their domestic counterparts. as a group, however, the performance of psbs in terms of profitability, spreads, non - performing assets and standard assets position seems to have been lower than that of the new private sector and foreign banks. there have been significant divergences in performance among the public sector banks – some have performed on par with private and foreign banks, whereas the performance of others has been relatively unsatisfactory. hence, although psbs have been subject to government intervention, these do not appear to provide a complete explanation of bank performance. bank specific factors such as rapid expansion, higher operating costs and differential industry focus seem to have been important considerations as well. public sector banks operating in the same environment with the same constraints have shown varied performance ; ultimately this reflects the performance of management. regulation and supervision a second major element of financial sector reforms in india has been a set of prudential measures aimed at imparting strength to the banking system as well as ensuring safety and soundness through greater transparency, accountability and public credibility. capital adequacy norms for banks are in line with the basel committee standards and from the end of march 2000, the prescribed ratio has been raised to 9 per cent. while the objective has been to meet the international standards, in certain cases, fine - tuning has occurred keeping in view the unique country - specific circumstances. for instance, risk weights have been prescribed for investment in central government securities on considerations of interest rate risk. also, while there is a degree of gradualism, there is an intensification beyond the ‘ best practices ’ in several instances in recent period, an example being exposure norms stipulated for

of framing the vision document covering the period up to 2011. given the wider range of economic activities that impact and in turn are influenced by the presence of a safe and efficient retail payments infrastructure in the country, developments in these systems can be harnessed to widen the scope of coverage of the services particularly in the context of financial inclusion. in countries like ours, developments in retail payments and their delivery channels can be effectively dove - tailed for bridging not only geographical gaps but also in terms of extension of financial activities and access to these activities to a wider section of society. payment and settlement systems in india have, and i am sure it is the case in many other jurisdictions too, players that are common across the retail and wholesale segments. access criteria for membership to the clearing houses that provide the retail products ( cheques, ach, etc. ) and eligibility to offer various payment products ( pre - paid instruments, mobile payments, etc. ) should be stringent enough to permit only strong entities with better risk management practices to enter. what we should aim for is a level - playing - field with players firmly - on - the - ground. infirmities and arbitrage opportunities in one segment should not be allowed to transcend into the other. procedures should be in place to benchmark and lay down the expectations and roles of different stakeholders in each product - segment. the endeavour should be to correspondingly benchmark these requirements and standards with international standards, wherever they are available. a word of caution – the international standards and benchmarks, including vendor solutions operating elsewhere, have to be dovetailed and customised to suit domestic requirements and situations. deliberations in seminars such as these also need to highlight the need for a set of standards or recommendations for best practices in the context of retail payment systems just as the prescriptions in the context of sips or securities settlement systems etc. may be a beginning could be made along the lines of the european central bank's " oversight standards for euro retail payment systems " ( june 2003 ) which seek to apply some of the core principles for sips to specific retail payment systems as well depending upon the assessment made by the central bank with respect to the systemic implication such retail systems can have. in the indian context, we have already made our electronic funds transfer systems such as rtgs ( real time gross settlement ) and neft ( national electronic funds transfer ) compliant with the fatf ( financial action task force ) requirements on wire transfers. we have