governance and conduct prudential regulation and conduct regulation denote what is commonly known as twin peaks model for the regulations. in rbi, we are looking at these two aspects through the prism of governance with equal emphasis on conduct of business through prudence. it's no doubt essential for the management to deliver good performance but more importantly this should be achieved by adhering to acceptable customer and market conduct and best corporate governance practices. we often see that the matters of conduct do not get the priority or attention of the board which they should be getting. customer service, customer conduct, ethical employee behaviour, data privacy, cyber security are critical and important issues which assume even greater relevance in times of innovation, change and business disruptions. good or rather best practices in these areas are the key soft pillars which build the edifice of a successful financial institution, more so in these challenging times. therefore, there is a need to reflect on the role and expectations from the governance architecture viz., the board and its committees, the independent directors and the assurance functions in banks and other financial institutions on these issues. in fact, the board should drive a culture where the expectation would be to go beyond baseline compliance to regulatory and legal requirements and aim for higher, best - inindustry standards. to this end, the board must ensure a suitable policy framework for its own assessment regarding effectiveness and composition, in accordance with their strategies and risk profiles, both at the aggregated and dis - aggregated levels. concluding remarks 4 / 5 bis - central bankers'speeches as we strive to become a developed country by 2047, financial institutions will need extraordinary amounts of financial resources to support growth to realise our visions for a brighter tomorrow. raising these resources would not be a constraint for financial intermediaries with robust governance frameworks as they can command a governance premium. it is important in this context to gain and retain the trust of other stakeholders such as depositors and various providers of financial resources. this is best ensured by strong governance, control, and assurance functions in financial institutions. also, while we collectively aspire for an efficient financial intermediation with positive spill over to the real sectors, these aspirations are set in an increasingly competitive, diverse, and interconnected world. as the saying goes, the time to fix the roof is while the sun is shining. the banking sector in india at this juncture is sound, resilient, and financially healthy. so, the time is perhaps right to improve the plumbing by

y v reddy : a central bankera€™s perspective of the world economy statement by mr y v reddy, governor of the reserve bank of india and alternate governor of the fund for india, at the joint annual discussion of the boards of governors, on the occasion of the 2003 imf / world bank annual meeting, dubai, 23 - 24 september 2003. * * * world bank group international bank for reconstruction and development international finance corporation international development association international centre for settlement of investment disputes multilateral investment guarantee agency international monetary fund mr. chairman : since we met last in april 2003, there have been some signs of improvement in the global environment. recent economic data of some countries as well as some forward looking market indicators, particularly those relating to financial markets indicate that we may be seeing some signs of global economic recovery. while we share the view that this could indicate the beginning of a stronger recovery, we recognize that considerable risks still persist, though the upside risks appear to outweigh the downside risks. the outlook for the united states, euro area and japan presents a mixed picture. if current trends are any indication, global recovery in the near - term would be led by the united states. however, the widened and historically high twin deficits, in fiscal and current accounts, of the united states pose the threat of possible disruptive adjustment of the us dollar against other major currencies. we recognize this as a necessary short term trade - off for realizing medium - term gains. we, therefore, urge all the major currency areas to coordinate their policies and to carefully monitor currency market behavior to minimize potential adverse repercussions on financial markets and on sustainability of global economic recovery. the recent depreciation of dollar has, to some extent, minimized the possibility of such disruptive adjustment. further, continuing robust productivity trends support the strong prospect for recovery in the united states. in this regard, there is considerable merit in the u. s. evolving a medium - term fiscal framework to bring its fiscal position on to a sustainable path. the outlook for the euro area seems rather flat. as in the us, there is a comparable element of trade - off. while the monetary stimulus provided by the european central bank is encouraging, scope exists for using fiscal stimulus in a more countercyclical manner. in our view, the stability and growth pact should be applied in a flexible manner to allow the automatic stabilizers to run their courses in the short - term, even if that results in marginal