’ s total debt is at risk, which is among the highest in the emerging economies while india ’ s banks have only 7. 9 per cent loss absorbing buffer, which is among the lowest. while these numbers might need an independent validation, regardless of that, it underscores the relative riskiness of the asset portfolio of the indian banks. as you all know, rbi has taken various steps to improve the system ’ s ability to deal with corporate and financial institution distress. this includes issuance of guidelines on “ early recognition of financial distress, prompt steps for resolution and fair recovery for lenders : framework for revitalising distressed assets in the economy, detailed guidelines on formation of joint lenders ’ forum ( jlf ), corrective action plan ( cap ), ‘ refinancing of project loans ’, ‘ sale of npas by banks ’ and other regulatory measures, which emphasized the need for early recognition of financial distress and for taking prompt steps for rectification, restructuring or recovery, thereby ensuring that interests of lenders and investors are protected. various reports that i get suggest that the implementation of jlf framework needs further improvement on the ground level. we have received representations from bigger lenders about non - cooperation from a few lenders. on the other hand, smaller lenders have voiced their concerns about being arm twisted by bigger lenders. unless, there is proper coordination between the interested parties, all the revival efforts are likely to fall flat. rbi had given a road map for ending the regulatory forbearance on asset classification of restructured accounts long back and accordingly, the forbearance has come to an end on march 31, 2015. there has been a lot of clamor from all quarters for extending this forbearance. our stand on this issue has been absolutely clear. i wish to highlight that ‘ restructuring ’ per se is not necessarily a forbidden word. it is a legitimate financial activity practiced the world over to help the borrowers tide over short term problems and to preserve economic value in the system. i don ’ t know why restructuring a loan which is under short term stress should not be done. what we are saying is that, the banks must acknowledge the problem, admit that the account is facing stress as of now, but is expected to recover in future. hence, make a small provision and reverse it when the account becomes satisfactory and starts paying. staying in denial mode does not help anyone especially in an interconnected world where regulation making

to day operations, particularly while dealing with their customers. 6. as we have noted, these are challenging times for the banking sector but as the cliched proverb goes “ every cloud has a silver lining ”. the future leaders in the banking industry would be those who identify this silver lining early and initiate necessary steps to leverage the opportunity. the impending competition from new banks and the large number of new accounts opened under the pmjdy scheme are two instances that readily come to mind of the challenges that could be turned into opportunities. besides this, banks as the key players in the country ’ s financial system also carry the responsibility of supporting economic growth, once the economic cycle turns favourable. banks have to prepare themselves for meeting this responsibility by nurturing a healthier balance sheet. i conclude by wishing the state bank of mysore management the very best on this occasion and thank you all for patient hearing! bis central bankers ’ speeches