balance sheets. in respect of health of indian banks, the reserve bank has taken various steps to address the issue of stressed assets of the banks. after a comprehensive asset quality review, banks have initiated the process of cleaning up balance sheets by march 2017. while this may lead to a short - term impact on profitability of some of the psu banks, it would enable a healthy flow of credit to the system in the long run. further, efforts at improving the capital buffers of banks will be helpful as they prepare to lend more now, after cleaning up their balance sheets. also, the steps being taken to improve governance in banks, such as the setting up of a banks ’ board bureau ( bbb ), would complement these efforts to develop and strengthen the banking sector. in respect of corporate sector stress, as evident from profitability and lower interest coverage ratio, the efforts at deleveraging, including by way of exit from non - core business, enhanced productivity and additional equity infusion and better governance practices supported by policies aimed at containing the global headwinds have to be fast - tracked. 18. a deep, vibrant and well - developed financial market is needed to facilitate efficient resource allocation, risk dispersion and credit intermediation. government, reserve bank, and other regulators have been constantly engaged in taking measures that would help in developing markets. during the last few years, reserve bank has taken various measures including introduction of currency futures and options, interest rate futures which would add to the menu of already existing over the counter instruments for managing the currency and interest rate risks. further, in order to give a fillip to the development of term repo market, reserve bank allowed re - repoing of securities acquired under market repo. these products, if used judiciously would facilitate corporates to manage their risk exposure efficiently. 19. underscoring the importance of a vibrant corporate bond market that could help the country in meeting the large scale infrastructure financing, reserve bank has allowed repo in corporate bonds as well as selling and buying of single name credit default swaps. there is also a proposal to introduce electronic trading platform for corporate bonds in india. i would, however, like to add here that we have not seen a wide range of players participating in recently launched products - be it in the area of currency derivatives or interest rate consumer prices in india decreased to 5. 18 percent year - on - year in february 2016, lower than 5. 69 percent in january.

consumer inflation eased for the first time in seven months, reaching the lowest since october. inflation averaged 7. 85 percent from 2012 until 2016, reaching an all time high of 11. 16 percent in november of 2013 and a record low of 3. 69 percent in july of 2015. bis central bankers ’ speeches derivatives. government is initiating the process of legislation for lender protection that would incentivise flow of debt funds to corporates. the government has announced a slew of proposals in the union budget for 2016 – 17 that would give a fillip to the corporate bond market in india. these include expanding the investment basket for foreign portfolio investors to include unlisted debt securities and pass through securities issued by securitisation and introduction of electronic auction platform for primary debt. early passage of the bankruptcy code will greatly facilitate the development of corporate debt market. reserve bank in collaboration with the government and other regulators will continue with its efforts in bringing about reforms in the financial sector. 20. while domestic policies that reinforce the macro - economic fundamentals help us to cope with external vulnerabilities, given our increasing level of international linkages we cannot be immune to spill - back effects of action or inaction of other countries, particularly arising from surges in inflows or sudden & substantial outflows. this calls for regional and global safety nets in terms of multilateral institutional mechanisms for funding support. it is also imperative that institutional mechanisms ( e. g., the international monetary fund ) should exist at the global level to assess the policies of large economies from the point of their contagion impact on other countries, particularly emdes and advise them to factor such consequences in their policy framework. india will have to work vigorously to build - up global consensus in this area. in conclusion 21. as i said in the beginning, i do not take a very pessimistic view of the current global situation and would prefer not to call it “ turmoil ”. i would rather consider the current situation as a great opportunity for india to position itself as a leader who would shape the world economic order in years to come. there would be challenges, nevertheless. the real challenge would be to sustain the improved fundamentals over a longer period and contain the spill over effect from other parts of the world. while other countries may take measures best suited to them, our focus should continue to remain on improving domestic macroeconomic fundamentals, including addressing the infrastructure bottlenecks, ensuring price stability, narrowing current