be regulatory framework for meeting these challenges? does it not require a 180° change? since there are a large number and variety of financial products involved, what appropriate regulatory framework needs to be in place for effective regulation? the question that may need to be examined would be the appropriateness of single versus multiple regulators. whether the existing regulatory co - ordination mechanism, as followed through hlccfm, continue in the same form? is there a need to separate regulation from supervision? vii ) what should be business model in terms of pricing, marketing, product development? transparency in pricing is the key in the context of the huge volumes involved and banks may need to examine the level of their margins. treating customers fairly will be a crucial issue for gennext banking as the customers will be more educated and aware of their rights. viii ) what should be the approach to risk management framework? in view of the large volume, products and customers involved and the exponential growth taking place in banking services, how risk management will evolve to mitigate the emerging risks? ix ) what are the institutions and supporting requirements and challenges in the technology, communication and network connectivity which will enable seamless services in a secured and cost - effective environment? x ) hr issues will assume prominence as the banks may have to assess the skill requirement for providing such services and accordingly create the workforce. to sum up, i have attempted to outline the scope for increasing the banking industry's operations and competitiveness through information and communication technologies in the context of demographic trends of india and the knowledge economy that we are embarking upon. i hope that this conference will further deliberate on these issues and come out with the appropriate framework to be developed through which all players will work together to establish the system to cater to the requirements of the future. it is important that all the banking products be made available under one roof and provided in a seamless manner ; otherwise, we would lose this opportunity. i am sure that 21st century will be our century and the banking sector will rise to these challenges and more. i wish the deliberations a success. thank you. select reference 1. goldman sachs ( 2007 ), india ’ s rising growth potential, january 2007. 2. government of india ( 2007 ), economic survey 2006 – 07. 3. muhleisen, martin ( 1997 ), improving india ` s saving performance, imf working paper no. 97 / 4, international monetary fund, january. 4. rodrik, dani and arvin

average of 11. 0 cent during 1990 - 95 to 5. 3 per cent during 19952000 and to 4. 9 per cent during 2002 - 07. the trending down of inflation has been associated with a significant reduction in inflation volatility, which is indicative of well - anchored inflation expectations, despite the visitations of adverse shocks, both domestic and external. there is evidence that the widening and deepening of the financial sector, the diffusion of micro structural reforms along with improved regulatory and supervisory oversight have enabled the development of a robust, efficient and diversified financial system with sound and well - functioning financial markets. the combined effects of competition, regulatory measures, policy environment and motivation have imparted greater strength, efficiency and stability to the financial sector. the efficacy of financial sector reforms is also reflected in the significant improvement in the asset quality of the banking sector. currently, all scheduled commercial banks are compliant with the minimum capital adequacy ratio of 9 per cent. the overhang of gross non - performing assets of scheduled commercial banks has declined from 8. 80 per cent of advances in 2002 - 03 to 3. 30 per cent in 2005 - 06. operating expenses as a ratio of total assets has declined from 2. 24 per cent in 2002 - 03 to 2. 11 per cent in 2005 - 06. developments in monetary policy a monetary targeting framework was in place in india since mid - 1980s and till 1997 - 98 with broad money ( m3 ) as an intermediate target. in practice, the monetary targeting framework was used in a flexible manner with feedback from developments in the real sector. the reserve bank formally switched over in 1998 - 99 to a multiple indicator approach. as per this approach, interest rates or rates of return in different markets ( money, capital and government securities markets ), along with data such as on currency in circulation, credit extended by banks and financial institutions, fiscal position, trade balance, capital flows, inflation rate, exchange rate, refinancing and transactions in foreign exchange, which are available with high - frequency, are juxtaposed with the trends in output, with a view to deriving policy perspectives. the multiple indicator approach made the monetary policy operation more broad - based on a large set of information and provided flexibility in the conduct of monetary management. as regards the operating procedure of monetary policy in india, reliance on direct instruments has been reduced and a policy preference for indirect instruments has become the cornerstone of current monetary policy operations. however, recourse to