sufficiently to the new technologies, or to globalization. understanding the reasons for this has been the aim of much of the research conducted by the bank of italy in recent years. i have reported on it several times, most notably in these annual remarks. our analyses point the finger at italy ’ s productive structure, which is more fragmented and static than in other economies ; and at government policies that fail to encourage, and often hamper, its development. bis central bankers ’ speeches the problem of the inefficiency of civil justice has to be tackled at the root. ordinary lower court cases are now estimated to last more than 1, 000 days, putting italy in 157th place out of the 183 countries covered in the world bank ’ s rankings. the consequent uncertainty is a major factor of friction in the economy as well as the source of injustice. according to our estimates, the shortcomings of the civil justice system in italy could subtract up to one percentage point a year from gdp growth. we must proceed with the reform of the education system, on which a start has been made, in order to raise our levels of academic achievement, which are among the lowest in the western world even with equal expenditure per student. the disparities within italy remain unacceptably wide, between north and south and between different schools within the same area, even at the level of compulsory education. at the university level, more competition between institutions is desirable in order to establish centres of excellence that can compete in the world arena. the number of university graduates is still low by international standards. according to oecd estimates, the gap between the italian education system and global best practices could depress the rate of gdp growth by as much as one percentage point in the long run. competition, which is well rooted in a good part of industry, is making very slow headway in services, especially public utilities. what is wanted is not unrestrained privatization but a system of regulated competition in which the customer, the citizen, is better protected. the challenge of growth cannot be left solely to the enterprises and workers that are directly exposed to international competition, while positional rents and monopoly advantages in other sectors depress employment and undermine the country ’ s overall competitiveness. italy lags behind the other main european countries in its endowment of infrastructure, despite having had a higher ratio of public infrastructural spending to gdp from the 1980s until 2008. under the government ’ s programmes the ratio is

drt and drat before courts should be made costlier for the appellants. courts should require them to deposit the undisputed portion of the loan before admitting the case so that routine frivolous appeals diminish. • the system also needs professional turn - around agents who can step in the place of promoters. asset reconstruction companies ( arcs ) were meant to do this, but they need more capital and better management capabilities. also, there is a requirement that they hand the enterprise back to the original promoter once they have generated enough value to repay the original debts. such a requirement is misconceived and needs to be repealed, else arcs have little incentive to spend effort and money to turn around firms. they will simply be liquidators, as they have largely proven to be so far. i should mention that the rbi is open to more firms applying for licenses as arcs. • the government is working on a new bankruptcy law, which is very much needed. properly structured, this will help bring clarity, predictability, and fairness to the restructuring process. flexibility not forbearance finally, let me end on a current concern that pertains to the rbi ’ s regulation that is not unrelated to the issues discussed in this lecture. today, a large number of industries are getting together with banks to clamour for regulatory forbearance. they want the rbi to be “ realistic ” and postpone any recognition of bad loans. this is short - sighted, especially on the part of the banks. today, the market does not distinguish much between non - performing loans and restructured loans, preferring to call them both stressed loans and discounting bank value accordingly. mutilating shakespeare, section 21 of rddbi act requires deposit of 75 % “ of the amount of debt so due from him as determined by the tribunal... ”. in appeals to drat from action initiated under sarfaesi act, under section 18 ( 1 ) second proviso of sarfaesi act, “... no appeal shall be entertained unless the borrower has deposited with the appellate tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the debt recovery tribunal, whichever is less. ” bis central bankers ’ speeches an npa by any other name smells as bad! indeed, because forbearance makes bank balance sheets opaque, they may smell worse to analysts and investors. the fundamental lesson