d. roms. the initiative with regard to the setting up of an electronic data interchange ( edi ) in the banking sector for the benefit of the exporters and importers bears mentioning. edi provides several benefits to the corporates such as operational efficiencies and cost savings by elimination of paperwork, logistical benefits by better scheduling and reduced stockholding etc., and strategic benefits through competitive and advantage and access to new markets. under the edi project, one of the major benefits for the exporters is that the rbi has abolished gr forms for export transactions. the exporters can now fill up a common statutory declaration form ( sdf ) for the customs from where the data relevant to the banks and the rbi can be extracted. presently, edi is working at 23 ports covering 80 per cent of exports. under the edi project, bank branches at 114 export intensive centers identified by the ministry of commerce are to be provided connectivity with the customs authorities. the reserve bank has provided the enabling conditions for promotion of trade and investment, both domestic and international, by ensuring adequate liquidity, a competitive interest rate regime measures to encourage decentralized decision making and ease procedures in the credit delivery systems and most importantly financial stability in the midst of a world economy beset by uncertainty and recessionary trends. it is now necessary for market participants to have enough confidence to make investment decisions. the reserve bank, on its part, would continue to ensure financial stability, strengthening of prudential norms with the strategy of convergence of international best practice, consistent with our specific needs, as also progressive strengthening of the supervisory framework. accordingly, the focus of our policy initiatives would be on streamlining banking operations in order to reduce transaction costs, infusing flexibility into the system, upgrading risk management systems, enhancing the level of compliance by banks with accounting standards, operationalising consolidated accounting practices and last and most important of all, providing the public with a financial system they can trust. while there is substantial progress in the financial sector reforms initiated in 1991, the accent at the present time is an implementation of the reforms at the grass roots level. in this context, the endeavour is to facilitate ease of transactions by the common persons, further broadening of the consultative process and continued emphasis on the institutional capacity to support growth consistent with stability. furthermore, the credit delivery system is being strengthened to ensure that financing gaps do not constrain the acceleration of growth. governor, dr. y. v. reddy, as part

establish branches in india. i may add that the wto commitments on banking services has been fulfilled. a critical issue of increasing international concern is the question of money laundering. the impact of money laundering is now beginning to extend from economic crimes to international terrorism. as financial transactions grow more complex, it becomes more difficult for banks to maintain a customer profile. the challenge, therefore, is to ensure that banks know their customers without hindering the smooth flow of financial transactions. the reserve bank has issued several guidelines to banks and non - banking financial companies to implement the ` know your customer ’ principle. the basic aim is to prevent banks being unwittingly used as the channel of funds derived from criminal activity or financing terrorism. the guidelines relate to identification of depositors and institution of systems and procedures to control financial frauds, identify money laundering and suspicious activities and scrutinize / monitor large - value cash transactions. in india, recognizing the paramount role of exports in the overall growth process of the economy, the government of india and the reserve bank of india have, over time, taken several measures to ensure adequate flow of credit towards export related activities. the important measures include rationalisation and liberalization of export credit interest rates, flexibility in repayment / pre - payment of pre - shipment credit, simplification of procedures relating to exports ( like direct dispatch of shipping documents and enhancement in normal period for realization of export proceeds ), flexibility to banks to source foreign currency funds for granting pre - shipment credit in foreign currency ( pcfc ) and export bill rediscounting ( ebr ), scheme and introduction of a transparent reporting system for export credit interest rates. at present, exporters have the option to avail of pre - shipment and post - shipment credit in foreign currency from banks in india. in order to encourage competition among banks and also to increase flow of credit to the export sector, the reserve bank of india has liberalized interest rates on local currency export credit effective may 1, 2003 for pre - shipment credit above 180 days and postshipment credit above 90 days. in the context of globalization, however, what one needs to keep in mind is that even though finance is a critical ingredient of production, what matters even more is the demand for the product and its competitiveness on quality considerations. finance can only act as a facilitator when these two preconditions are satisfied. this is vindicated by the recent surge in growth of exports of automotive components and c.