are making profits so that this can be used to absorb losses in case of downturn. a discussion paper on introduction of dynamic loan loss provisioning framework for banks in india has been put on the rbi website on march 30, 2012. a comprehensive forward looking provisioning framework based on data collected from select banks in respect of certain segments and system – wide data is being developed. the new approach would smoothen the impact of incurred losses on the profit and loss account through the cycle and thereby facilitate continued lending by banks during downturns. xiii. the reserve bank has from time to time also issued regulatory guidelines on other areas such as corporate governance, fit & proper, know your customer / anti money laundering, credit information sharing, customer services in addition to specific guidance on credit, market and operational risk management etc., to strengthen the over - all risk management culture in indian banks. recent risk management in banks 14. a survey on banking risk management, conducted under the aegis of the institute of international finance, sees a renewed focus on risk culture. it reports that risk culture is now at centre stage and banks have made significant progress toward changing their risk governance frameworks in the wake of the financial crisis. board risk committees are nearly universal, and members have received appropriate training in risk management. the role of the chief risk officer has broadened, while its seniority and status have been enhanced. they now report either to the chief executive officer or jointly to the ceo and risk committee. however, the survey laments that the industry continues to wrestle with the process of embedding risk culture beyond the boardroom and into business units while ensuring adequate risk transparency. 15. many respondents cited the balance between a sales - driven front - office culture and a risk - focused culture at higher levels as their top organizational challenge ; they also note lack of systems and data. they believe their organizations need to do more to instill a strong risk culture, underscoring the need for a sustained effort over a long period of time. 16. risk appetite continues to be an essential part of risk governance, but the industry continues to be challenged to embed risk appetite into business decisions. the financial services industry recognized during the financial crisis that boards needed to change focus from share price and profitability to the risks entailed in their strategies. also, chief risk officers needed to be empowered to create cultural change within their organizations. 17. with these shifts well underway, senior risk executives are focused on moving reputation and operational

. 5 per cent during the parallel run period. the leverage ratio framework is being revised in line with the recent proposals of the basel committee. ii. the reserve bank has issued enhanced pillar 3 disclosure requirements effective from quarter ended september 30, 2013 to improve transparency of regulatory capital and to enhance market discipline. iii. comprehensive liquidity risk management ( lrm ) guidelines were issued on november 7, 2012. based on the recent guidelines published by the basel committee on liquidity coverage ratio ( lcr ) in january 2013, the reserve bank is in the process of finalizing its guidelines on lcr which are expected to be issued shortly. iv. the guidelines issued by the reserve bank on july 2, 2013 ( effective january 1, 2014 ) on capital requirements for bank exposures to ccps provide incentives for banks to clear standardised otc derivatives contracts through qualified central counterparties. v. while none of the indian banks figure in the list of g - sibs, domestic sibs have to be identified. a draft framework for dealing with the d - sibs has been published on bis central bankers ’ speeches december 2, 2013. it requires that additional common equity capital requirement applicable to a d - sib with highest systemic importance will be 0. 8 % of rwas. vi. the reserve bank revised its guidelines on securitisation in may 2012 and introduced norms on minimum holding period, minimum retention ratio, and standards for due diligence to align the interest of the originators and investors, and induce “ skin in the game ” concept to discourage “ originate to distribute ” models. vii. un - hedged foreign currency exposures ( ufce ) of the corporates are a cause of concern as they pose risk to the individual corporates as also to the entire financial system. guidelines on risk management of un - hedged exposures as also the methodology to be followed by banks for computing incremental provisioning and capital requirements for exposure to corporates having un - hedged foreign currency exposures have since been introduced. viii. as a prudential measure aimed at avoiding concentration of credit risk and large losses due to intra - group transactions and exposures ( ites ), the reserve bank of india has prescribed regulatory guidelines on february 11, 2014, putting in place both quantitative limits for the financial intra - group transactions and exposures and prudential measures for the non - financial ites. ix. as the growing volume of non – performing assets along with restructured assets