devising appropriate decisions for maintaining financial system stability. going forward, there is an overarching need to amend the banking act to ensure that the banking sector is guided by legislation which sufficiently accounts for the change in the sectoral landscape and the challenges that may arise as the sector rapidly grows and evolves, across the country and beyond. the central bank is proactively working with all relevant stakeholders of the banking sector and looks forward to finalising a new banking act in the near - term. strengthening the regulatory and supervisory framework for the banking sector remains at the centre of our financial sector policy. as such, we are continuing to upgrade and enhance the bank examination methodology to ensure that the focus of examinations is not entirely a rule - based one that concentrates only on compliance, but also one which gives due consideration to the efficiency, effectiveness and sustainability of individual banks and the entire banking sector. accordingly, initiatives are underway to assign ratings to banks based on a combination of quantitative and qualitative indicators that will assess their efficiency and sustainability. during the course of this year, we expect to finalise the bank examination methodology based on the bank sustainability risk index ( bsri ) to facilitate the transition from an annual ‘ on - site ’ examination approach to a ‘ risk - based ’ supervision approach. further, we intend to incorporate bsri to examination reports of all licensed banks and assign a supervisory rating grade for banks with effect from 2019, on a staggered basis. banks have also been engaged in the implementation of basel iii capital standards and implementation is to be completed by 1 january 2019. while banks have been working on the improvement of their capital adequacy ratios, a capital conservation buffer and a surcharge on domestic systemically important banks have been imposed to ensure that banks actively build capital buffers. the direction to increase the existing minimum capital requirements was targeted at improving the quality of capital to ensure that these buffers are of a more resilient nature. this will help safeguard the banking sector during periods of excessive credit growth and / or adverse economic conditions. it will also minimise the systemic risk arising from the interconnectedness among banks. under the basel iii guidelines, banks will also be required to comply with guidelines regarding a net stable funding ratio with due consideration to the composition of their assets and off - balance sheet exposures. a consultation paper has already been issued to banks in this regard and the relevant standard is to be implemented during this year. the leverage ratio is also to be introduced as

promote a dynamic and resilient financial sector, the regulatory and supervisory framework of the central bank was further strengthened in line with international standards and best practices. at present, our banking sector accounts for over rs. 10 trillion in assets, while the non - bank financial institutions sector accounts for over rs. 1 trillion in assets. the implementation of basel iii capital standards was commenced in 2017 in order to develop a more robust banking sector. the framework to regulate the non - bank financial institutions was strengthened under challenging conditions, and resolution of distressed finance companies was also commenced. during 2017, the central bank continued to strengthen the regulatory framework for the microfinance sector, and continued to combat the menace of illegal pyramid schemes with the assistance of other government agencies. several measures were adopted to strengthen and modernise the payment and settlement infrastructure in order to develop an efficient and stable payment and settlement system in the country, as well as to pave the way towards a digital economy. being a trusted, professionally competent and strong institution, the central bank is entrusted with vital agency functions. accordingly, as per our mandate, we carried out public debt management with the objective of mobilising the government ’ s financing requirements at the lowest possible cost and with a prudent degree of risk. the framework for public debt management was reinforced by introducing a transparent market based auction mechanism for the issuance of government securities. this has already resulted in desirable outcomes of lowering interest costs to the government, efficient price discovery and improved transmission of monetary policy signals across the benchmark yield curve. the employees ’ provident fund, which is the largest superannuation fund in the country, is managed by the central bank. it passed a significant milestone during 2017 with total assets of the fund surpassing rs. 2. 0 trillion. the central bank also continued to promote financial literacy and inclusiveness and helped entrepreneurship development through our credit schemes for agriculture and livestock, as well as the micro, small and medium scale enterprise ( msme ) sectors. in addition, we also adopted measures to promote a clean note policy in the country and improvements were also made in currency operations and processing. in 2017, the central bank implemented a new legislative and a policy framework for foreign exchange operations based on the foreign exchange act, no. 12 of 2017. provisions of the new act are being implemented through the newly established department of foreign exchange in the central bank focusing on reducing restrictions, excluding ambiguities, simplifying processes and enhancing efficiency associated with foreign exchange transactions while