but banks need to be aware of the risks their exposures to this sector add to their portfolios. what are rbi ’ s expectations from banks? one, the needs of the legitimate borrowers should be met fairly. this applies to small and medium enterprises, as there is a perception of inadequate flow to this segment and it is hurting the ability of these businesses to take advantage of the recovery. two, it is important to play safe. here, in the context of segments such as real estate, banks should not jump on opportunities that appear very attractive in the short term, while compromising on prudence. we do not want to squeeze the recovery and deny the needs for financing, but we do not want them to go overboard in risk taking. that ’ s the balance we are expecting. how big is the threat of large bad debt on the restructured portfolio? it is clearly something you need to watch out for. it may put some stress on certain individual banks. when the restructuring option was given, it was based on the premise that genuine borrowers in distress as a result of the liquidity squeeze would be subject to that restructuring. the risk was that assets that were not fundamentally sound would also be given the option. you cannot blame the concept of restructuring. some automobile companies said yesterday that the sales momentum would lose steam after the crr hike. let me use an automotive analogy. if you are driving a car at 100 kmph and know the road ends five kms later, what do you do? do you begin to gradually apply the brakes now or do you wait till you are near the end of the road and then slam the brakes? both are legitimate options : the question is which is riskier. we clearly take the view that if we see a barrier, which is now in the form of inflationary pressure building up, it is better to use the first option and gently apply the brakes. this way, you gradually adjust to the optimal speed and it is safer than the second option which can throw a lot of things out of gear. outside rbi, people always wonder how much backseat driving is done from delhi. now that you have been in rbi for a while, do you find an element of backseat driving? at the end of the day, we basically want the same thing, which is growth with stability. we want growth to be as high as possible, we want inflation to be as low as possible, we want financial stability and we want stability on the external front

greening the financial system, based at the banque de france – estimates that the losses caused by chronic physical risks could amount to 15 % of global gdp by 2050, three times higher than its previous estimate of 5 %. another telling indicator is the recent estimate from france assureurs that more than half of private dwellings in france ( 11. 1 million ) are potentially at risk from clay shrinkage and swelling, which causes cracks and structural damage. lastly, the insurance industry needs to adapt its business models to the risks generated by demographic shifts in our societies. according to insee, iii the share of people aged over 65 is set to rise sharply, from 21 % in 2021 to 29 % in 2070. naturally, this is exacerbating the issue of how to maintain income levels after retirement, cover health costs ( senior health care ) and finance support for the elderly ( dependency ). in france, insurers already play a crucial role in health care and provident schemes, and hold a significant proportion of french citizens ’ retirement savings. how far can this role expand? 2 ) the frontiers of insurability : a few ideas this key issue is of course a sensitive one. i would like to share with you three thoughts on three levers. a better understanding of risks recent technological advances, especially in data gathering and artificial intelligence, must be fully leveraged to improve our understanding of the risks. but we should avoid the pitfalls of demutualising risks and excessive individualisation, which would be to deny the very role of insurance. on this issue, we have closely followed the debates surrounding the proposed european fida regulation, and the talks seem to be heading towards a sound balance between the secure but nonetheless broader sharing of financial data. moreover, climate stress testing is a good example of new tools. the exercise piloted by the acpr and completed in may 2024, which focused exclusively on insurers, has increased players ’ ability to anticipate the effects of climate change page 5 of 9 and adapt their strategies accordingly, notably thanks to the long - term scenario ( 2050 ) that was proposed. encouragement of prevention by insurers prevention must also play an important role : insurers can influence behaviour by encouraging measures to adapt to risks. regarding it / cyber risks, the terms and conditions of cyber risk insurance can help to boost resilience, notably by making security audits compulsory or setting minimum security standards to be met beforehand. regarding climate risks,