- cut mechanisms for enforcement. there are several overlaps in the recommendations of advisory groups with concomitant relevance for legislative changes keeping in view such overlaps. some of the notable overlaps are between ( a ) monetary and financial policies and fiscal transparency ; ( b ) corporate governance and banking supervision ; ( c ) payment and settlement system and securities market regulation ; ( d ) accounting and auditing and banking supervision. the issues of regulatory overlap were highlighted by several advisory groups which has a bearing on the policy and procedures though not on legal framework as such. daunting agenda for legal reform the reports of advisory groups have identified several areas requiring legislative actions to ensure enhancement in standards and codes relating to financial sector. the agenda arising out of the reports is daunting as will be clear from the description below. first, the improvements suggested by the advisory group on payment and settlement system would necessitate amendments to reserve bank of india act and banking regulation act. while a new enactment viz. the payment systems regulation act may also be needed, the implementation of the rest of the recommendations would require notification of regulations under all the above enactments as well as in the information technology act and the indian contract act. second, on matters covered by the advisory group on banking supervision, amendments and appropriate notifications under reserve bank of india act and banking regulation act would suffice. third, in respect of securities market regulation, amendments are needed in respect of securities exchange board of india act ; unit trust of india act, and the companies act. it may also be desirable to consider a new enactment to deal with financial frauds. several policy and procedural changes would, no doubt, be needed by the securities regulator. the self - regulatory bodies are also required to enunciate code of conduct and best practices in securities transactions. fourth, in respect of the report of advisory group on transparency in monetary and financial policies, a possible amendment to constitution of india was expressed in the context of an ongoing review by a national commission. more important, several amendments to reserve bank of india act and banking regulation act supplemented by policy and procedural changes on the part of rbi and government of india would be essential. fifth, the report of advisory group on corporate governance covers a wide spectrum of institutions and practices warranting actions in three broad areas. amendments in companies act accompanied by stipulations in regard to listing agreements of stock exchanges by securities regulators would address the set of issues governing private shareholders in corporates in general.

there is enormous scope for the banks to expand their business to areas / sectors hitherto lacking formal credit. bis central bankers ’ speeches domestic credit of the banking sector to gdp ( in % ) 10. banks have to develop the ability to maintain high growth levels over a sustained period of time. they also need to develop strong linkages with the real sector. these linkages should critically determine all aspects of banking operations including the kind of products and services offered, the pricing strategies, delivery channels adopted, sectors / sub - sectors receiving focused attention, technology platforms adopted, etc. this linkage with the real sector will ensure relevance of banks as a key pillar in the economic system and enable them to fully meet their crucial role in nation building. besides, by ensuring that the financial system grows in tandem with the real sector, build up of systemic risk through creation of asset price bubbles can be avoided. this lack of linkage between the financial system and the real sector was one of the critical factors contributing to the global financial crisis and hence, the importance of this linkage has been one of our important learnings from the crisis. what are our strengths? demographic dividend sometimes, like the mythological hanuman, we need to be reminded of our strengths, first and foremost of which is the great demographic dividend that the country enjoys. india has a young population not only in comparison to advanced economies but also in relation to the large developing countries. according to the approach document to the twelfth five year plan, the labour force in india is expected to increase by 32 per cent over the next 20 years, while it will decline by 4 per cent in industrialized countries and by nearly 5 per cent in china. this “ demographic dividend ” can lead to sustainable long term growth, provided two conditions are fulfilled. one, higher levels of health, education and skill development must be achieved. two, an environment must be created in which the economy not just grows rapidly, but also promotes inclusion by generating good quality employment / livelihood opportunities to meet the needs and aspirations of the youth. the demographic dividend has payoffs in creating a skilled, technology savvy work force, strong customer base and higher savings rates, thereby increasing the resources available for productive investments. the progress made in the field of education and literacy is leading our transformation from being the world ’ s back office to being a knowledge partner. bis central bankers ’ speeches potential for inclusive growth a recent internal study conducted by the reserve bank on the profile of customers