banking and non - banking sectors. we have been taking several steps to strengthen the regulatory and supervisory frameworks in order to increase the resilience of the banking system. new guidelines have been issued for resolution of stressed assets, which will sustain the improvements in credit culture. 16. in the non - banking sector, the reserve bank has recently come out with draft guidelines for a robust liquidity framework for the nbfcs. we are also giving a fresh look at their regulatory and supervisory framework. it is our endeavour to have an optimal level of regulation and supervision so that the nbfc sector is financially resilient and robust. the reserve bank will continue to monitor the activity and performance of this sector with a focus on major entities and their interlinkages with other sectors. the reserve bank will not hesitate to take any required steps to maintain financial stability. 17. we are also taking a number of steps to improve commercial viability of urban co - operative banks ( ucbs ). these steps include proposed establishment of an umbrella organisation and a centralised fraud registry for ucbs and governance reforms at the board level. we are also encouraging voluntary merger and consolidation in the sector to help reduce operating costs, diversify risks and economise on capital. interplay between inflation and growth objectives 18. at the end, let me highlight the role of the reserve bank in the context of the mandate under the reserve bank of india act, 1934 : “ to regulate the issue of bank notes and the keeping of reserves with a view to securing monetary stability in india and generally to operate the currency and credit system of the country to its advantage ”. this mandate has been interpreted over time as to maintain price stability, financial stability and economic growth with the relative emphasis between these objectives governed by the prevailing macroeconomic conditions. this role of the reserve bank has been restated as per the amendment in the rbi act in may 2016 according to which “ the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth ”. therefore it has been our endeavour in the reserve bank to ensure price stability under the flexible inflation targeting regime and simultaneously focus on growth when inflation is under control. 19. in a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives. the relative emphasis on inflation and growth depends on prevailing macroeconomic scenario, inflation and growth outlook and signals emerging from incoming data. post global financial crisis, it has been recognised that price stability may not

scale of its operations on the financial system. our regulatory approach towards nbfc sector has been guided by a combination of activity - based and entity - based regulations to safeguard financial stability and protect customers. we have tried to leverage the strengths of both these approaches to achieve a more comprehensive and flexible regulatory framework. we find this hybrid approach particularly valuable for an everevolving nbfc sector, where innovations and new business models seem to be constantly emerging. entity based regulations have the advantage of providing a comprehensive view of overall risk exposure of a specific financial institution and is better placed to address the systemic risks arising from the interplay of various activities within a single entity to minimise negative externalities. from regulator's perspective, entity - based regulations are generally easier to implement and enforce, as regulations are applied uniformly to a set of entities. however, the flip side is that entity - based regulations may be less precise in targeting specific activities, slower to adapt to changing landscape, and, at times, may potentially impose extra burden on low - risk activities. on the other hand, activity - based regulations allow for more precise targeting of potentially risky financial activities by enabling the regulators to focus on high - risk activities regardless of the type of institution involved. potential down - side is that such an approach could result in a fragmented regulatory landscape, with different rules for various activities, potentially making oversight more complex. at times, systemic risks arising from the combination of multiple activities may remain undetected. it has been advocated that ideally, the principle of same risk, same activity, same regulation should apply, i. e, there should be similar regulation for entities undertaking similar activity to avoid regulatory arbitrage. as the saying goes - if it looks like a duck, quacks like a duck, and acts like a duck, then it probably is a duck - and should be regulated as a duck. however, this approach needs to be calibrated suitably for effective yet non - stifling regulations. instead of following a narrow approach of putting in place the same set of regulations for all financial institutions irrespective of their scale of operations, a nuanced approach may be more suitable for achieving the desired objectives. we have been cognizant of the fact that the nbfcs engage in specialised activities, each carrying its unique risks, and the flexibility inherent in the hybrid model has enabled us to adapt swiftly to the changes in the sector without sacrificing the overarching