after the taper talk ) has been below 2 per cent of gdp, though it rose to 2. 7 per cent in the first half of the financial year 2018 – 19 reflecting elevated crude oil prices. modest current account deficit in recent years was accompanied by robust flows of foreign direct investment ( fdi ). strong fdi inflows and build - up of foreign exchange reserve buffers have helped india meet its external financing requirements despite domestic capital market facing sizeable outflows of foreign portfolio investment. 15. as a few advanced economies are on the path of monetary policy normalisation, there has been global portfolio rebalancing away from emes, including india. another factor that has repercussions for india ’ s external sector is the recent developments around brexit. there are consequential policy challenges for india which enjoys strong trade and investment relations with uk and the eu. we will carefully weigh the challenges and opportunities that lie ahead and undertake appropriate policy responses. 16. as regards policy environment relating to the external sector, sectoral norms for foreign direct investment have been eased gradually and now 100 per cent fdi is permitted in all sectors, barring a few prohibited sectors. in recent years, the focus has been to simplify the fdi policy regime by abolishing the foreign investment promotion board, rationalising various procedures, introducing e - biz portal as a single window for obtaining clearances from the central government and using information technology as enabler to make governance more effective. two days ago, we have also substantially rationalised and liberalised the regulations governing the external commercial borrowings by the indian entities to improve ease of doing business. the full impact of all these reforms and a stable domestic macroeconomic environment will 3 / 5 bis central bankers'speeches fructify in coming years. in fact, gross fdi inflows in india were at a record high of us $ 61 billion in 2017 – 18. 17. further, external debt to gdp ratio has fallen from 22. 4 per cent at end - march 2013 to 20. 8 per cent at end - september 2018. other external indicators, viz., import cover and short - term debt to reserves ratio are also better, relative to the taper talk period of mid - 2013 when the indian rupee had come under severe pressure ). challenges and outlook 18. india is widely believed to remain world ’ s fastest - growing major economy in the medium to long term. the growth projections of several

reserve bank, the ratio may further improve to 10. 3 per cent by march 20191. 7. the new resolution framework with the insolvency and bankruptcy code ( ibc ) as its lynchpin and rbi ’ s regulatory framework as its facilitator, is a game changer. it endeavours to create an environment in which maximum value can be realised from troubled assets, bolstered by the early identification of incipient stress. the shift of power in favour of creditors in the ibc framework will facilitate speedier and impartial resolution process and help in improving the credit repayment culture. the framework has been providing a market - driven, time - bound process for insolvency resolution of a corporate debtor, thereby helping financial institutions to clean up their balance sheets. most importantly, it is aiding a paradigm shift in the extant credit culture and discipline. 8. the progress of ibc framework so far has been encouraging and has resulted in better recovery as compared to the earlier mechanisms. data available till january 3, 2019 suggest that the resolution processes have been approved in 66 cases, involving around ₹800 billion as resolution value to creditors. the gradually building resilience of the banking sector is evidenced by the fact that banks have improved their profitability ratios and capital positions. other soundness indicators such as the tier i leverage ratio at 6. 7 per cent and the liquidity coverage ratio at 134. 8 per cent as at end - september 2018 remain well above the minimum regulatory requirements. provision coverage ratio also increased to 52. 4 per cent at end - september 2018 from 48. 3 per cent at end - march 2018. bank credit is recovering from the risk aversion of recent years. bank intermediation in the flow of resources to the commercial sector is regaining lost ground. 9. the growing size and complexity of the indian financial system warrants strengthening of corporate governance systems in banks. incidence of financial frauds in recent times further underscores the significance of sound corporate governance standards in banks. the government, the bank board bureau and the reserve bank are currently engaged in developing an objective framework for performance evaluation and this should redefine the contours of corporate governance in the public sector banks ( psbs ) with a focus on transparency, accountability and skills. 10. on the consumer protection front, improvements in grievance redressal, introduction of innovative products for digital payments, and measures to improve cyber security in banking are all expected