with predominantly government - owned banks, tend to have much higher state - ownership of banks compared to their developed counterparts. while many emerging countries chose to privatise their public sector banking industry after a process of absorption of the overhang problems by the government, we have encouraged state - run banks to diversify ownership by inducting private share capital through public offerings rather than by strategic sales and still absorb the overhang problems. the process has helped reduce the burden on the government, enhance transparency, encourage market discipline and improve efficiency as reflected in stock market valuation, promote efficient new private sector banks, while drastically reducing the share of the wholly government owned public sector banks in a rapidly growing industry. our successful reform of public sector banks is a good example of a dynamic mix of public and private ownership in banks. a noteworthy feature of banking reforms in india is the growth of newly licensed private sector banks, some of which have attained globally best standards in terms of technology, services and sophistication. in many respects related to performance, these domestically promoted banks have surpassed branches of foreign banks in india, and could be a role model for other banks. ii. challenges ahead let me highlight some thoughts on certain areas which have a key bearing on the ability of indian banks to remain competitive and enhance soundness. needless to state, these are more in the nature of random thoughts, rather than any structured thinking, and are meant to invite discussion. first, cost management. cost containment is a key to sustainability of bank profits as well as their long - term viability. to highlight this point, let me, take recourse to some figures. in 2003, operating costs of banks as a proportion of total average assets1 in the uk were 2. 12 per cent, for those in switzerland they were 2. 03 per cent, and less than 2 per cent in major european economies like sweden, austria, germany and france. in india, however, in 2003, operating costs as proportion of total assets of scheduled commercial banks stood at 2. 24 per cent. the tasks ahead are thus clear and within reach. second, recovery management. this is a key to the stability of the banking sector. there should be no hesitation in stating that indian banks have done a remarkable job in containment of non - performing loans ( npl ) considering the overhang issues and overall difficult environment. let me add that for 2004, the net npl ratio for the indian scheduled commercial banks at 2. 9 per cent is

benoit cœure : monetary policy and the risk of a lost decade speech by mr benoit cœure, member of the executive board of the european central bank, at the amundi world investment forum 2013 “ mapping uncharted territories of investing ”, paris, 5 july 2013. * * * i wish to thank georgi krustev, alexander popov and philip vermeulen for their contributions to these remarks. i remain solely responsible for the opinions contained herein. ladies and gentlemen, it is a pleasure for me to be here with you. today, i would like to discuss the risks which characterise the long - term outlook for the euro area. i will also offer my view on some of the policy responses that are necessary to ensure that those risks do not materialise. the specific risk scenario that i wish to consider is that of a “ lost decade ” – the possibility of a much more protracted period of stagnation than currently anticipated. like others, in referring to a lost decade, i am drawing an analogy with japan ’ s experience between 1991 and 2000, when average annual per capita gdp growth was less than 0. 5 %. with japan ’ s experience in mind, a particularly worrisome scenario for the euro area is related to the possibility that the banking sector ’ s efforts to reduce leverage and to restructure its balance sheets have not yet been completed. troubled banks ’ balance sheets have the potential to choke the engine of recovery and exert a more persistent drag on economic growth. a protracted slowdown may also produce longer - lasting consequences on potential output growth. this is why i will study the implications of such a scenario in some detail. let me repeat that this is a risk scenario. in the short term, the modal scenario in the eurosystem staff macroeconomic projections is that the euro area economy will stabilise and recover in the course of the year, albeit at a subdued pace and with risks continuing to be on the downside. it is the policymakers ’ duty, however, to identify the potential factors which may lead to a “ lost decade ” scenario and design the policy actions that are best suited to pre - empt it. the euro area outlook but, let me start first with the current outlook for the euro area. the euro area is still suffering from the consequences of the financial crisis. euro area real gdp declined, quarter on quarter, by 0. 3 % in the first quarter of 2013