build - up of all types of buffers. in an overarching sense, this approach is reflected in the accumulation of foreign exchange reserves which, as our experience has shown, has become our national safety net in the absence of a truly global financial shield. besides providing the wherewithal to protect our financial markets and institutions from being overwhelmed by global spillovers, the reserves have helped to build bulwarks of external strength, as reflected in modest external debt servicing and debt to gdp ratios. we believe that this is strengthening our capability to manage new challenges such as climate change and cyber threats while maintaining public confidence and ensuring the financing requirements of india's development strategy. thank you. 1 this includes 12 small finance banks, 6 payment banks, 2 local area banks and 43 regional rural banks. 6 / 7 bis - central bankers'speeches 2 2. 9 lakh crore in indian rupees. 3 national electronic fund transfer and real time gross settlement. 7 / 7 bis - central bankers'speeches

system provides extensive guidelines for inspection of the internal control and audit function, and prescribes that a bank ’ s internal controls allow identification and controlling of risks. the internal audit departments in banks are required to have appropriate resources and staff with the requisite skills. tasks can be outsourced, allowing additional expertise to be brought in. the auditors reported that overall experience with the quality of internal audit of banks was satisfactory. however, the fsap for india laments at several points the fact that the reserve bank ’ s regulatory powers over banks are not neutral to bank ownership : 1. in the detailed assessment report ( dar ) on the basel core principles ( bcp ) on the effective banking supervision, para 6, page 7 : some previously observed weaknesses concerning the independence of the rbi and the inherent conflict of interest when 1 / 8 bis central bankers'speeches supervising public sector banks ( psbs ) remain. the rbi enjoys a large degree of operational autonomy, but amendments to several legal provisions, and formal grounding of rbi independence in the rbi act, would provide greater legal certainty. the rbi ’ s legal powers to supervise and regulate psbs are also constrained – it cannot remove psb directors or management, who are appointed by the government of india ( goi ), nor can it force a merger or trigger the liquidation of a psb ; it [ rbi ] has also limited legal authority to hold psb boards accountable regarding strategic direction, risk profiles, assessment of management, and compensation. legal reforms are thus highly desirable to empower the rbi to fully exercise the same responsibilities for psbs as now apply to private banks, and to ensure a level playing field in supervisory enforcement. 2. specifically, on corporate governance ( cp 14, para 50, page 18 ) : the appropriate rules on fitness and propriety, and banks ’ internal governance structures, are in place with respect to private and foreign banks. nevertheless, the influence the rbi may exercise on banks ’ governance through section 21 br act, placement of rbi representatives on banks ’ boards, and the rbi ’ s very limited authority under the banking acts, as well as the custom to hold the psb boards accountable has become problematic. under the law and according to custom, the rbi cannot hold psb boards accountable for assessing and – when necessary – replacing weak and nonperforming senior management and government - appointed board members. 1 let me elaborate. banking regulatory powers in india are not ownership neutral all commercial banks in india are regulated by