n s vishwanathan : basel iii liquidity risk framework – implementation and way forward expanded version of opening address by mr n s vishwanathan, executive director of the reserve bank of india, at the “ basel iii liquidity risk framework – implementation and way forward ”, hyderabad, 27 november 2015. * * * the contribution of shri puneet pancholy, dgm, dbr is gratefully acknowledged. good morning. it is my pleasure to be with you in hyderabad in this conference on the basel iii liquidity risk framework in india. as the chair of a group discussion on liquidity coverage ratio ( lcr ) and net stable funding ratio ( nsfr ) at the fixed income money market and derivatives association of india ( fimmda ) annual conference in prague a couple of months ago, i had hinted that the reserve bank would initiate a process of discussions with bankers on the whole gamut of issues concerning basel iii liquidity framework. i am happy to say that the plan for this unique endeavour has fructified, as a result of a series of discussions with you all. why this seminar it needs no mention that liquidity framework is an important part of the post - crisis reforms taken up by the basel committee and i believe it is a very significant one. prior to these guidelines, the regulations relating to liquidity were limited which in a way paved the way for the banks to extensively use wholesale short term funding to fund long term assets. unlike the west, our banking system did not depend on wholesale short term funds. our system was more dependent on public deposits and did not face the kind of liquidity issues that the banking system in the west did. there were several reasons for this. first, our economy had a high domestic, and more particularly household, savings ratio. second, there were not many avenues for the household to park their savings and hence banks became the primary repository. third, the banking system was largely in the public sector which gave the public a sense of safety of their funds. fourth, we always had the notion of an acceptable credit - deposit ratio that provided an informal foil to any attempt to build an over - extended credit portfolio. fifth, we bis central bankers ’ speeches had the statutory liquidity ratio ( slr ), which statutorily required that a part of the demand and time liabilities are held in liquid assets. sixth, as early as 1999, we had issued guidelines on asset liability management ( alm ) by banks

the wings waiting for a go ahead. 17. india has good it talent as also financial sector talent and hence this experiment to bring ict based financial inclusion is not only relevant to india but to the entire globe as success of this experiment can be replicated elsewhere. entire world is looking at these developments with keen interest. we need to meet these expectations. 18. we have a broad based government - central bank commitment to financial inclusion to help alleviate poverty. our aim is to help create an enabling policy and regulatory environment for innovative financial inclusion. the present enabling environment will critically determine the speed at which the financial services access gap will close for the people currently excluded. 19. thank you. i wish the 23rd skoch summit all the best and hope the deliberations here throw new light on various aspects of financial deepening.