with regard to entry point and the regulatory and supervisory issues. competition steps have also been initiated to infuse competition into the financial system. the rbi issued guidelines in 1993 is respect of establishment of new banks in the private sector. likewise, foreign banks have been given more liberal entry. recently, the norms for entry of new private banks were rationalised. two new private sector banks have been given ‘ in - principle ’ approval under these revised guidelines. the union budget 2002 - 03 has also provided a fillip to the foreign banking segment, permitted these banks, depending on their size, strategies and objectives, to choose to operate either as branches of their overseas parent, or, corporatize as domestic companies. this is expected to impart greater flexibility in their operations and provide them with a level - playing field vis - a - vis their domestic counterparts. as a group, however, the performance of psbs in terms of profitability, spreads, non - performing assets and standard assets position seems to have been lower than that of the new private sector and foreign banks. there have been significant divergences in performance among the public sector banks – some have performed on par with private and foreign banks, whereas the performance of others has been relatively unsatisfactory. hence, although psbs have been subject to government intervention, these do not appear to provide a complete explanation of bank performance. bank specific factors such as rapid expansion, higher operating costs and differential industry focus seem to have been important considerations as well. public sector banks operating in the same environment with the same constraints have shown varied performance ; ultimately this reflects the performance of management. regulation and supervision a second major element of financial sector reforms in india has been a set of prudential measures aimed at imparting strength to the banking system as well as ensuring safety and soundness through greater transparency, accountability and public credibility. capital adequacy norms for banks are in line with the basel committee standards and from the end of march 2000, the prescribed ratio has been raised to 9 per cent. while the objective has been to meet the international standards, in certain cases, fine - tuning has occurred keeping in view the unique country - specific circumstances. for instance, risk weights have been prescribed for investment in central government securities on considerations of interest rate risk. also, while there is a degree of gradualism, there is an intensification beyond the ‘ best practices ’ in several instances in recent period, an example being exposure norms stipulated for

##scores just how lasting strong and norman ’ s vision for central bank co - operation was. but with greater access also comes greater risk – and in recent years central banks, in common with commercial banks, have had to come to terms with the sharply - increased threat from money laundering, terrorist financing and cyber - attack. once again there is an echo with 1917 : at a time of war, the bank of england and new york fed were obsessed with the possibility that their communications might be intercepted, and spent months debating the relative merits of the charmingly - named ‘ lieber five letter code ’ and ‘ bentley ’ s complete phrase code ’. but the potential sophistication of today ’ s attackers, and the financial, reputational and legal risks they pose to central banks are far greater than a century ago. the bank of england archives hold a number of letters between cunliffe, cokayne and strong on this subject. all speeches are available online at www. bankofengland. co. uk / speeches as simon potter has already said, that is why it is so important that, just as central banks co - operate to provide the services they need to another, they must also co - operate in raising the standards and controls applied to those services to the highest possible levels – because we are only as strong as our weakest link. raising standards means : within our own organisations – having robust risk - based processes for assessing counterparties and transactions, in compliance with relevant law and guidance ; for controlling the access, people and system risks in central banking processes ; and for monitoring and responding to potential risks if and when they crystallise. and, externally, it means sharing intelligence and promoting best practice ; and complying and attesting promptly, and with candour, to relevant international standards. making progress in both of these areas is vital if the expansion in access to central banks services of recent years is to be maintained. i want to end on a positive note. the international system is constantly evolving. policy regimes come and go. and the importance of specific reserve currencies may rise and fall : the minnows of today can be the giants of tomorrow. that is why it is so important to co - operate, as strong and norman clearly recognised at a previous critical switching - point in world affairs. of course, the concept of co - operation can be pushed too far. during his time in london in 1916, strong reported an ‘ astonishing suggestion ’