he yielded to negative public sentiment about sita ’ s purity and banished sita into exile in the forest for a second time. sage valmiki provided shelter to a pregnant sita in his ashram ( hermitage ) where she delivered twin sons named luv and kush. sage valmiki trained luv and kush to be masters in archery so that no one on earth could defeat them in war. he also taught them about divine and celestial warfare. ram decided to perform ashwamedha yagna to enlarge his empire. the ashwamedha yagna is a ritual where an emperor sends out a horse accompanied by his army to various neighboring kingdoms. the local king has two options. he could either allow the horse to wander, signaling that his kingdom is annexed. or, he could tie up the horse, indicating that he was ready to battle the emperor ’ s army. the horse wandered into the forest where luv and kush lived and the twins tied up the horse, not knowing its significance. ram sent hanuman to retrieve the horse. hanuman recognized luv and kush as the sons of ram. he let them capture him and tie him up. worried, ram sent his brothers and his army to look for the horse. as they saw hanuman tied up and luv and kush guarding him, they thought the two boys had stolen the horse. bis central bankers ’ speeches so ram ’ s brothers started attacking luv and kush who defeated them all. eventually, ram himself came to confront them in battle and eventually learned that luv and kush were his children. once sita witnessed the acceptance of her children by ram, sita sought final refuge in the arms of her mother bhumi devi ( the goddess earth ), to receive her and as the ground opens, she vanishes into it. if you want to learn how it is ram did not know he had these two powerful sons, then i encourage you to read the ramayana. for me, luv and kush represent the future of central banking … a strong approach of specialized, skills that can take on any force. at central bank, we are building capacity in specialized skills such as anti - money laundering, actuarial science, cyber security and operational risk. demand is also picking up for expert skills in strategic communications, international relations, and behavioral psychology. a decade ago, these skill sets were nowhere on the radar of central bank. like luv and

+ [ ( beta * outstanding loans ) – ( delta specific provision ) ] - - - - - - - - the first component of the general provision was alpha times the incremental loans granted by a bank. this component therefore recognised the credit risk expected during expansions although the loan losses have not yet been identified in a specific loan. the second component was beta times the stock of outstanding loans reduced by specific provisions made during the period. one can observe that in the second component, beta which is historical average specific provision is compared with the current level of specific provision. this difference would be positive during periods of boom when the current levels of specific provisions are lower than the historical average and thus adds towards the balance of general provision. similarly, in periods of downturns / recession, the current level of specific provision may be higher than the historical average of specific provision ; in that case, the second component becomes negative and this component is subtracted from the first component and may cause the general provision fund to be drawn down. thus the second component is countercyclical in nature which builds up during upturns and is drawn during downturns. the second component is also reflective of the strength and weakness of the lending cycle depending upon the addition / drawals made from the general provision. alpha and beta were calibrated by bank of spain for six homogeneous risk categories ranging from zero risk ( cash, public sector debt, etc. ) to high risk ( credit cards and overdrafts ). an option was also given to banks to use their own calibrated parameters based on their own credit histories and experiences, subject to supervisory approval. let me give an example to make things clearer. assume outstanding stock of loans in a bank x to be rs. 1000 and the previous year balance of loans to be rs. 800, thus assuming the incremental growth in credit to be rs. 200. further assume that the alpha and beta component as given by the supervisor to be 2 % and 1 % respectively. assume the specific provision required for the current year to be rs. 8. for the first year, bank x would make a general provision equal to alpha times incremental loans i. e. 2 % of rs. 200 i. e., rs. 4 plus difference between beta times outstanding loans and specific provision which in this case works out to 1 % of rs. 1000 – rs. 8 = rs. 2. thus, a total general provision of rs. 6