. concerted efforts by banks will be needed if the benefits of transparent and competitive pricing are to reach every user of the foreign exchange markets. 20. as derivative markets are liberalized, market conduct needs to be strengthened through robust assessment of product suitability and user appropriateness. regulatory requirements in this regard are being reviewed in consonance with the overall changes to the regulatory approach. ensuring resilience and safety 21. financial market infrastructure in india has remained resilient even during various financial crises. learning from international episodes of market failure, several further initiatives have been taken to ensure continued resilience. 22. fair market conduct is critical to ensure efficient functioning and preserving trust in the financial ecosystem. hitherto, conduct codes prescribed by market bodies like fimmda and fedai guided participants in the financial markets. to supplement and strengthen these, a regulatory framework for market abuse has been put in place. 23. the reserve bank has been taking measures to implement the g20 over - the - counter ( otc ) derivatives market reforms. in line with global trends, electronic trading platforms ( etps ) have been brought under regulatory purview to ensure efficiency of operations and address systemic risks. a draft framework for variation margin for otc derivatives aimed at reducing counterparty risks from non - centrally cleared derivatives, has been recently issued. 24. global efforts are underway to put in place a legal entity identifier ( lei ) which uniquely identifies financial market participants and enables aggregation of risks. reserve bank has also mandated the use of the lei for participants in the markets it regulates. in fact, we are one of the few countries that has implemented lei beyond derivative markets to cover transactions in government securities and money markets as well as the credit market ( large loans ). 25. a key issue which has been engaging global attention is the transition from the libor to alternate reference rates. in india, several measures have been taken to make financial benchmark processes more transparent and robust. most recently, the administrators of significant financial benchmarks were brought under regulation to ensure robust governance frameworks and process controls. these reforms will stand us in good stead as we prepare ourselves for the libor transition. the indian banks ’ association has been working closely with market participants to facilitate the transition to alternate benchmarks and create customer awareness. achieving a smooth transition from a benchmark entrenched in the financial system will require significant efforts from all stakeholders. 4 / 5 bis central bankers'speeches iv. conclusion 26.

direction, we have reduced the periodicity of the nbfc supervision to 12 months from 18 months earlier. we expect the board of directors of companies themselves to act diligently and take necessary action based on reserve bank ’ s supervision reports. 26. further, our objective is to harmonise the liquidity norms between banks and nbfcs, taking into account the unique business model of the nbfcs vis - a - vis banks. in this context, the final guidelines on the liquidity risk management framework which we have proposed recently will be issued shortly. 27. let me also make a reference to urban co - operative banks ( ucbs ). our experience suggests that the board of directors of ucbs require greater expertise and skill to conduct banking business professionally. the reserve bank is in the process of issuing guidelines on this issue. a need is also felt for establishment of an umbrella organisation for ucbs which may extend loans and refinance facilities, setup it infrastructure and provide support for capital and liquidity. the structure, functions and the regulatory guidelines of this organisation are being examined by the reserve bank. mergers and consolidation in the sector will also help in reducing operating costs, encouraging greater risk diversification and economising capital. we propose to put in place a mechanism for encouraging voluntary mergers in the sector through appropriate incentives. we also propose to create a centralised fraud registry for ucbs. 28. i have highlighted several issues in the banking and non - banking sectors. a sound and resilient financial system is a prerequisite for a modern economy that involves all sections of its society in sharing equitably the benefits of economic and social progress. as you would know, reforms are an ongoing process. the reserve bank will endeavour to be proactive in its approach. in the fast - changing financial landscape, we will continue to be watchful to the emerging challenges and respond to them appropriately to ensure a resilient and robust financial system. 1 to be implemented from april 1, 2020 5 / 6 bis central bankers'speeches 6 / 6 bis central bankers'speeches