attitudes towards security issues. with regard to the former, the reserve bank has issued guidelines on various issues such as internet banking, is audit, business continuity plan etc. as regards the latter i. e. the attitude towards security issues, this is an hr challenge and not one which can be addressed so easily but is one which is the core challenge. the work force of tomorrow would be a more enlightened lot, functioning in a more educated environment. continuous skill enhancement and regular training, apart from good compensation, will lead to better employee retention and motivation in a highly challenging and changing environment. i have said this before and i repeat that traditional hr systems in banks would need to undergo rapid changes in the manner of recruitment, motivation, performance appraisal and compensation package. the sooner this is done the better it would be. india is recognised as the ultimate destination for it talents and firms from the world over are seeking it solutions from india. our banking system too has matured and proved its resilience and capabilities. a combination of these two professionals i. e. banks and it should be able to lift not just the banking industry but the entire economy, especially the rural sector onto a higher trajectory of growth. permit me to end my address with a quote from the book “ the world is flat ” by thomas l. friedman which makes one proud to be indian. i quote, “ if i have a grand daughter one day and i tell her that i am going to india she will say grand pa is that where software comes from ”. perhaps, a decade ahead it would be a little kid in switzerland pointing to the signboard of an indian bank and saying “ look dad – our bank ”! thank you.

pricing, so there is a big disadvantage in terms of losing deposits to your competitors if you are the first to reprice for the new regulations. but if an institution has a large reliance on this source of funding, it won ’ t be able to change that reliance overnight on the 31st december 2014. just like supertankers, funding structures take a long time to change direction, and that change of course needs to be occurring around now. on the subject of funding, one notable feature of banks ’ funding over the past three or four years has been the shift away from short - term debt securities toward deposits, in particular, term deposits ( graph 3 ). this shift has been a deliberate strategy on the part of the banks and has been brought about by significant changes to their pricing structure. the interest rates offered on term deposits to both retail and wholesale customers are now priced well above the rates at which the banks issue equivalent maturity debt securities, such as certificates of deposit ( graph 4 ). bis central bankers ’ speeches graph 3 graph 4 given the forthcoming liquidity regulations, a shift toward deposits certainly makes sense. the basel iii framework views deposits as a much more stable source of funding, and has lower run - off assumptions for most types of deposits than it does for wholesale debt securities. bis central bankers ’ speeches however, as with the relative price of liquid assets, one can ’ t explain all of the movement in deposit pricing in terms of prospective liquidity regulations. the intensity of the competition and the rates paid on some of these deposits far exceed the implied regulatory incentive. why, then, are banks willing to pay such high rates for this type of funding? to a large extent, the impetus has come from an internal reassessment of funding resiliency, the rating agencies and the broader market, where a bank ’ s ability to attract deposits has received greater attention since the financial crisis. quite possibly, some of the focus on deposit - to - loan ratios and similar metrics is misplaced. regardless, while term deposits appear to be a very expensive source of funding, in the current environment, banks presumably believe the alternatives would be even more expensive for their overall cost of funds. nevertheless, the effects of changes in funding composition on the total change in funding costs for adis in the past five years has been fairly marginal. the increase in the cost of funding for banks and, ultimately, their customers, has been driven considerably more by a fundamental reassessment within financial markets of