to be fair to the sector, some of the events were external & hence, not in control of the bank management. but the important lesson is unambiguous : “ in absence of strong structural and governance reforms, consistency of the performance would always remain susceptible to such events ” such reforms in private incentives / compensations sector banks have to be focussed on misaligned agenda for psbs is much larger, however, the immediate and overriding priority is to complete the clean - up of the banks ’ balance sheets which is underway resultant provisioning needs coupled with meeting basel iii norms / migration to ifrs & to capture due market share in growth funding would entail recapitalisation of most of these banks. seeking this capital externally at this stage may be difficult as also value eroding for the majority owner. simultaneously process has to continue to bestow greater “ governance autonomy ” to these banks. my sense is that the government ownership of these banks has resulted in crucial stability and resilience in trying times. immediate roadmap should, therefore, be towards complete “ managerial autonomy ”. if government remains the largest shareholder, not necessarily majority shareholder, it still serves the intended purpose. at the same time, it releases these banks from multi - institutional oversights and overlapping controls. bis central bankers ’ speeches hr autonomy would naturally flow from the above. banks would be able to move towards competitive compensation, flexible hiring and move away from the “ collective bargaining ” - just to quote a few from many possible outcomes. there could be a reasonable apprehension that such measures can adversely impact the objectives of inclusive growth being attempted through several national missions and schemes. i would argue that advent of several new institutions ( as recently licensed by rbi ), new processes, digital advancements & competition would ensure that these objectives are well supported. similarly, some of the reforms are driven by a global reform structure. these pertain to capital, liquidity and disclosure standards under the basel iii package. some such other measures are tlac, sibs, misconduct rules, etc. few other measures are currently under discussion, such as, imposing risk weight on sovereign exposure and new standardised approach for credit and operational risk. having dealt with the framework of macro reforms, let me now briefly touch upon nuts and bolts of the reform process. governance in banks • some action already taken - setting up of bbb, post of cmd split into a non - executive chairman and a ceo, selection process made more objective

##ify in the months ahead. 11. it is heartening that there is coordination among developed countries in the management of the crisis. that is welcome and necessary, but not sufficient. in as much as emerging and developing economies are likely to be increasingly impacted by the crisis, going forward two things are necessary. first, in managing the crisis, the implications of that management for emerging and developing economies should be explicitly factored in. second, emerging and developing economies should be taken into confidence and consulted whenever the policies and actions of the developed countries have implications for them.