k c chakrabarty : talent management in the indian banking system address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the silver jubilee function of the institute of banking personnel selection ( ibps ), mumbai, 2 april 2010. * * * the assistance provided by shri suddhasatva ghosh in preparation of this address is gratefully acknowledged. shri m. balachandran, director, ibps, shri alok k. mishra, cmd, bank of india, shri d. p. sharda and shri r. k. chaudhury, ex - directors, ibps, executive directors of banks, distinguished guests, ladies and gentlemen ; i am indeed very happy to be in your midst today for the silver jubilee function of ibps. april 1 has special significance for both rbi and ibps. it is the day rbi was established 75 years ago and it is also the foundation day for ibps. yesterday, we celebrated the grand finale event of our platinum jubilee year and, today, ibps is celebrating its silver jubilee year. so, first of all a very hearty congratulations to all the employees, governing council members and all the stakeholders on this day. reaching such a significant milestone in the life of an institution is always very special. it is not only a day to feel proud, it is a day to reflect, a day to share, and a day to celebrate. it is also an opportunity to reemphasize what the institution stands for, to renew its values. such a moment constitutes one of the few opportunities for collective sharing in an institution. the coming together and the camaraderie that this day evokes is also perhaps the appropriate moment for introspection and reflection on the evolution of the institution, its current and future challenges, and how the institution can fulfill its objectives even better. over these years, the ibps has made a mark as a premier national level institute for recruitment, training and research related to selection and management of human resources. since its inception, the institute has provided commendable services to various organizations for recruitment, internal promotions, placement and admissions. it has also been assisting the financial sector towards employees ’ selection, promotion and placement. in recent years, the institute has also engaged itself in a variety of extension services related to personnel selection and human resource development / human resource management. far - reaching developments in the roles and activities of banks and financial institutions in

to being an exclusive deposit insurance system. 5. over nearly 50 years, the dicgc has evolved and moved up the value chain – learning by doing as it were – and met many challenges along the way. by far the biggest challenge came in 2001 when a large co - operative bank in the state of gujarat was in trouble. since several banks, particularly many small co - operative banks, had exposure to this bank, its failure had the potential to precipitate a crisis in the banking industry. the government and the reserve bank put in place resolution of this bank through a restructuring programme. the key element of this programme was proactive action by the dicgc towards prompt payment of claims to the depositors of the bank. this action by dicgc ensured that panic did not spread. global crisis and deposit insurance 6. let me now turn to the recent financial crisis. though the crisis impacted the entire world, it affected different countries in different ways. after the collapse of lehman brothers in mid - september 2008, there was an abrupt breakdown of trust, which spread rapidly from the united states to other advanced economies, causing financial markets in all advanced economies go into seizure. suddenly, there was a great deal of uncertainty about the extent of losses, the ability of banks to withstand those losses, the extent of risk in the system, where it lay and how it might explode. this uncertainty triggered unprecedented panic and almost totally paralyzed the entire chain of financial intermediation. banks hoarded liquidity. credit, bond and equity markets nearly froze. several venerable financial institutions came to the brink of collapse. massive deleveraging drove down asset prices setting off a vicious cycle. in such a situation, governments and regulators had to take extraordinary measures in a big way. 7. not surprisingly, deposit insurance emerged as the most visible part of the financial safety - net in arresting a panic reaction. several deposit insurance systems increased their insurance coverage limits ; in some cases the governments extended blanket deposit guarantee. these measures went a long way in restoring public confidence in the banking system in economies where it came under serious threat. global crisis and india ’ s response 8. that india was hit by the crisis dismayed many people. in the years before the crisis, the decoupling theory gained intellectual ascendancy. this theory held that even if advanced economies went into a downturn, emerging market economies would not be affected because of their improved policy framework, robust foreign exchange reserves, and sound banking systems. the