have been increased from a few weeks to a few months. in the case of the eurosystem, a major share of refinancing operations have a maturity of three months, and, recently, a six - month facility has been introduced ; - a widening of the range of eligible collateral, i. e. the securities used as collateral. securities such as abs and rmbs, which have always been accepted by the eurosystem, are now accepted by all other major central banks ; - an extension of the list of eligible counterparties, in particular in the united states, where investment banks now have access to the fed ’ s lending facility ; - a greater degree of coordination between central banks : this not only includes joint statements aimed at reassuring the markets about the provision of liquidity when the need arises, but also the signing of swap agreements between central banks. this facility enables any european bank which needs us dollars to pursue its activities to secure this funding from the ecb or the snb. 3 ) were central banks right to take these steps? the fast spillover of the us subprime crisis to other market segments, and subsequently to other countries through the seizing up of the commercial paper market and the major strains on money and interbank markets, called for rapid central bank intervention. this not only included providing liquidity to the market as a whole but also, in some countries, granting emergency liquidity assistance to systemic institutions. these interventions have raised a number of questions : did not central banks, by adapting their operational framework to fit the circumstances, increase moral hazard? did they not unduly save institutions that did not deserve to be saved, in particular those which had taken excessive risks? did they comply with the traditional principles expounded by bagehot many years ago, i. e. lend to temporarily illiquid but solvent financial institutions, lend at penalty rates against sound collateral, and provide liquidity to any institution satisfying the aforementioned solvency and collateral criteria? these essential questions are, however, mainly academic. today, they take on different dimensions. indeed, all financial crises cause a downward spiral in asset prices, which before long transforms a temporarily illiquid institution into an insolvent institution, making bagehot ’ s initial distinction difficult to apply. this situation is exacerbated in our developed financial systems by the joint application of new accounting standards requiring fair value measurement for financial assets and prudential arrangements that may prove partly procyclical.

far above the limit. this share of foreign banks stood at 49 per cent, as at end - january 2007, as mentioned in the india ’ s trade policy review, 2007. it is thus very obvious that the indian regulatory regime is essentially non - discriminatory as between branches of foreign banks and domestic banks, in regard to their authorisation or the scope of their operations, though some hold that there is some positive discrimination in favour of the foreign banks. as explained, indian regulatory regime is in fact much more equitable and provides a far more level playing field to the foreign banks, than in many other jurisdictions both developed and emerging economies. as regards the market share of the foreign banks in the indian commercial banking system, the share, as at end - june 2007, in the deposits and advances stood at 6. 11 and 6. 83 per cent, respectively. however, the foreign banks were far more dominant in the off - balance sheet business with a market share of as high as 72. 66 per cent. besides the foreign banks, there are also two large indian private sector banks in which the non - resident ownership is very close to 74 per cent permitted, which could, therefore, be considered as incorporated in india but predominantly foreign owned banks. these banks together with the foreign banks, have a combined market share in the country in the deposits, advances and off - balancesheet business of 17. 46, 18. 65 and 76. 63 per cent, respectively, which, by no means, are insignificant levels. moreover, there are also about 10 large listed public sector banks in which the non - resident / fii shareholding was close to the permitted ceiling of 20 per cent, as at march - end 2007. in these public sector banks, resident private shareholding would thus be close to thirty per cent only. furthermore, the share of the foreign banks in the foreign exchange market in india was also significant and had registered a rising trend. for instance, as against their share of 41 per cent in the total foreign exchange turnover during 2005 - 06, their share during the first half of 2007 - 08 stood at 52 per cent. thus, viewed in totality, it would be extremely difficult to justify the notion that the foreign and non - resident participation in the indian banking markets is insignificant or restricted and that the policy or regulatory environment is not conducive to it. another dimension of the foreign banks ’ functioning in india is the returns generated from their indian operations. let me