banks compute rwas. besides, a new explicit capital charge for interest rate risk for banking book positions is also proposed to be introduced. further, specific to the advanced approaches for risk measurement, the basel committee is undertaking a strategic framework review with a view to enhancing simplicity, reducing complexity and at the same time ensuring that the framework remains risk sensitive. the committee would also examine the potential for interaction amongst various policy prescriptions amongst themselves as well as with the monetary policy objectives to assess whether there is any potential room for material inconsistency which may severely undermine the overall objectives. 10. the fourth element impacting capital requirements is provisioning. ifrs 9 requires provisioning based on expected loss provisions. the bcbs only recently put out a discussion paper on accounting issues in estimating expected loss. 11. no doubt the new framework will need additional capital. specific to the psbs, government has announced the infusion of rs 70000 crore over the next four years. but the need of the hour is as much for the psbs to improve their internal processes to enhance efficiency, optimise the capital allocation and deal with the asset quality issue. there are several measures internal to banks and they must look at them than just look at the external factors. a lot can be done to improve credit underwriting, manage the credit post disbursement and recoveries. there is thus scope for improvement of internal accruals as a source of capital, and improving efficiency, risk management system and asset quality management are one of the most important parts of that effort so that external capital is not required for cleaning up balancer sheets unlike what would be happening now. bis central bankers ’ speeches 12. when capital requirement increases, there is impact on growth. there are varying estimates of this impact. the macroeconomic assessment group ( mag ) established in february 2010 by financial stability board and basel committee on banking supervision to coordinate an assessment of the macroeconomic implications of the basel committee ’ s proposed reforms, estimates that bringing the global common equity capital ratio to a level that would meet the agreed minimum requirement and the capital conservation buffer would result in a maximum decline in gdp, relative to baseline forecasts, of 0. 22 %, which would occur after 35 quarters. in terms of growth rates, annual growth would be 0. 03 percentage points ( or 3 basis points ) below its baseline level during this time. this is then followed by a recovery in gdp towards the baseline. banks can also respond to the higher capital

##e ) has established a regional statistical data collection system covering as many as 25 indicators including business conditions, price variation, labour and employment. these are different from the qualitative surveys. information so collected is analysed and transformed into scores which forms an important input in the deliberations of the monetary policy committee ( mpc ) of the boe. india is a country with significant regional variations. hence regional inputs are valuable for policy making. with its reorganised structure and envisaged wider presence of regional offices in major centres, the department may put a similar system of gathering relevant statistics and market intelligence, particularly in the area of prices and agricultural conditions to aid policy formulation at the national level. sixth, as a part of the on - going work with dcm on forecasting of demand for currency and coins, it is necessary to conduct focused regional surveys relating to ( i ) availability / shortages of coins / currency notes, ( ii ) regional practice and usage of currency notes, and ( iii ) estimation of counterfeit currency notes in the system. in addition, the regional offices of the department could be directly involved in conducting surveys on financial inclusion, particularly assessment of financial inclusion outcomes in the villages following the outreach programme of the bank. seventh, the department has noticeable presence in a number of central office departments, like department of external investment and operations ( deio ), monetary policy department ( mpd ), internal debt management department ( idmd ), department of information technology ( dit ), department of payment and settlement systems ( dpss ), department of banking supervision ( dbs ) and financial stability unit ( fsu ). it is desirable that our officers bis central bankers ’ speeches in these departments provide analytical inputs for policy and operational issues and come out with research papers. these papers could be presented in conferences and published eventually in the rbi working paper series. this will make research more valuable in furthering our organisational objectives. eighth, focused and determined approach to research across various units, including the regional offices, should be pursued so that research agenda being adopted by the department is accomplished in a timely manner. for data management and dissemination, technology must be harnessed to its fullest extent. there is also a need to strengthen the modelling and forecasting capabilities towards developing a full fledged forecasting suite including dsge models. finally, i congratulate the department for its many achievements. however, there are challenges ahead, to some of which i have drawn your