of the indian banks to the synthetic and complex structured products. the adverse effects on the economy were mainly due to sudden reversal of capital flows, tightening of credit availability from the overseas and domestic markets impacting respectively the domestic forex market and liquidity conditions. this resulted in increased pressure on banks to provide credit at a time when their financial resources were already quite strained pursuant to the rapid credit expansion in the previous three years. in the circumstances, the thrust of the various policy initiatives by the reserve bank has been on providing ample rupee liquidity, ensuring comfortable dollar liquidity and maintaining a market environment conducive for the continued flow of credit to productive sectors. 7. what saved the day for the indian financial system was our policy approach of gradual and calibrated integration of the domestic financial system with overseas markets, especially the debt markets – through capital controls – as also well - modulated regulatory policies to contain bank exposure to sensitive sectors, which are more prone to asset bubbles, such as real estate and capital markets. further, ensuring that banks maintained adequate capital and liquidity while containing undue volatility in the forex and debt markets helped in preserving financial stability, while promoting growth. in understanding the indian perspective on banking regulation, it would be useful to look at the regulatory framework prior to the crisis and the measures initiated to strengthen it in the wake of the crisis. regulatory framework – prior to the crisis 8. in devising the regulatory framework for banks, rbi has always kept in focus the financial stability objective. a number of counter - cyclical regulatory measures that are now attracting attention world - wide, were already in place in india even before the onset of the crisis capital requirements 9. the minimum capital adequacy ratio ( crar ) for banks in india at nine per cent is higher than the basel norm of eight per cent. banks are also required to ensure minimum tier i capital ratio of six per cent from april 1, 2010. the current average crar for the scheduled commercial banks is over 13 per cent while tier i ratio is about nine per cent. importantly, tier i capital does not include items such as intangible assets and deferred tax assets that are now sought to be deducted internationally. liquidity buffers 10. indian banks have a significant holding of liquid assets as they are required to maintain cash reserve ratio – crr, currently 5. 75 per cent – and statutory liquidity ratio – slr, currently 25 per cent – both,

carlos da silva costa : addressing npls at a european level leaving the crossroads address by mr carlos da silva costa, governor of the bank of portugal, in the magazine of the eurofi conference in malta, 5 - 7 april 2017. * * * addressing the high level of npls was one of the ssm ’ s supervisory priorities for 2016. it remains one of the major supervisory challenges in 2017. indeed, the overall stock of npls in the euro area is relatively high compared with other geographies, albeit with significant heterogeneity. some member states experienced a rapid surge in the npl ratio subsequent to a burst of a real estate bubble. in other member states, the increase occurred later and was widespread across sectors. this is the case of portugal, for instance, where npls grew essentially in the context of the 2011 – 13 recession and are a manifestation of the ongoing economic adjustment process, characterized by a reallocation of resources towards the tradable sector and away from the construction and real estate sectors. the current setting mirrors these differences in pace and drivers, as well as the specificities of national economies : some jurisdictions report double - digit npl ratios, while others report much lower levels. in an integrated market, however, different ratios do not – cannot – mean different degrees of concern. repercussions of high npl levels cross borders : through banks ’ balances sheet cross - exposures, through economic spillovers in the face of subdued credit supply and hindered monetary policy transmission and inevitably through market perception. the systemic nature of such risks is heightened by widespread low bank profitability, increasing capital requirements and a still incipient npl secondary market. npls are, indisputably, a european problem. and a european problem calls for a european approach. but to what extent? a european approach resides first and foremost on concerted action from all member states. enhanced efforts at national level, especially in what regards bank supervision and marked improvements in the legal / judicial / tax framework – notably to reduce the significant bid / ask spread in npls secondary market – are a necessary condition to address the high npl stock and to build the foundations for a better management of flows. but they are certainly not sufficient. the abovementioned risks of contagion also require targeted and potent initiatives to reduce the npl stock – and this is where a unified european strategy could prove more valuable. a european problem calls for a european approach. but to