. 2 / 5 bis central bankers'speeches but an increase in npls must be viewed in perspective. banks are in the business of intermediating risk. when risks materialise – as they sometimes do when those who borrow get into difficulties – npls must rise. this may be odd for a regulator to say – but if npls did not rise at all during difficult times, then the banks are probably not lending enough or taking on sufficient risk to promote business expansion or enterprise. what is important is : is the rise in npls manageable and contained? are problem loans being monitored closely and classified prudently? are provisions made proactively and conservatively? take for example singapore. npls have risen amidst a weakening economic environment and emerging asset quality risks in the oil and gas ( o & g ) sector, which has been weighed down by low oil prices. but our banks ’ exposure to the o & g sector is contained. the banking system ’ s aggregate exposure to the o & g sector is around 10 %. for local banks, this figure is lower at 6 - 7 %. banks in singapore have also made adequate provisions for their overall npls. the overall provisioning cover for the banking system, as a percentage of total unsecured npls, is above 100 %. the local banks ’ provisioning cover is even higher, at above 200 %. the good news for asian banks is that these cyclical headwinds should pass in time. growth is recovering, monetary policy is normalising, and commodity prices are stabilising. asian banks are positioning for asian growth and a digital future and that takes us to the medium to long term. the prospects for asian banks are good – chiefly because the prospects for asian economies are good. the region is expected to continue registering relatively high growth rates in the medium term – about 6 % on average over the next 5 years, compared to the global average of 3. 7 %. higher asian incomes will drive demand for financial services, leading to more opportunities in banking. at the same time, financial inclusion remains low in many parts of asia. a 2015 world bank study found that of the 2 billion adults on the planet with no bank accounts, more than half were in east and south asia 3. a more recent study by the adb covering cambodia, indonesia, myanmar and the philippines found significant gaps between demand and supply in several financial services, including payments, savings, and credit4. interestingly, the authors estimated

trading partners. a strong relationship with india will complement our rapidly growing links with china, and help us to realise the strategy of growing two external wings in the region, with the two emerging economic giants. on the part of india, since singapore is already nearly completely tariff free, major gains will be in investment and services. india ’ s economic reform and liberalisation has brought in foreign investments and benefited india for over a decade. similarly, a ceca that opens up more opportunities to investors from singapore, improves the business environment and strengthens the protection that their investments enjoy, will encourage more high - value investments to flow from singapore into india. with india ’ s growing strengths in services, a comprehensive agreement in services will open up new opportunities for indian companies in singapore and the region. strategically, a ceca will anchor india ’ s position in southeast asia. it will ensure that india joins in the opportunities that southeast asia offers, just as companies from the us, japan, and china are already doing. it will also spur other asean countries to expand their ties with india. this is exactly what happened with the us - singapore fta, and with the japan - singapore economic cooperation agreement. after singapore made these two agreements, other asean countries started to pursue similar arrangements with the us and japan. singapore is happy at this, as we will benefit when our neighbours too are promoting freer trade and investment flows. i hope our ceca negotiators will complete their work soon, and deliver a comprehensive and substantive agreement that both countries can be proud of. singapore as a launchpad from the business point of view, a ceca is the ideal platform for both countries to broaden and deepen bilateral co - operation, and advance our shared interests. singapore makes an excellent partner for indian companies embarking on a strategy of regionalisation or globalisation. because of our historical and cultural ties, indians are very comfortable in singapore ’ s social and corporate culture. singapore is a good base for indian companies to engage southeast and east asia. they can take full advantage of singapore ’ s trade and business networks in these growth markets, in particular china. singapore is also a major transportation, logistics and financial centre in asia. we welcome indian companies to make use of our international network of air, sea and telecommunications linkages, and tap the network and resources of 6, 000 mncs in singapore. already over 1, 000 indian companies are in singapore. in the last 3 years alone, over 150 indian companies have