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The scope of disclosure and transparency has also been raised in accordance with international practices. India has complied with almost all the Core Principles of Effective Banking Supervision of the Basel Committee. Some of the Indian banks are also presenting their accounts as per the U.S. GAAP. The roadmap for adoption of Basel II is also under formulation.
All these factors give Indian banks much needed confidence for overseas operations. But as I said earlier overseas operations is one thing and competing against the global players in the international market is quite another. And Indian banks have a lot of catching up to do before they can emerge as truly global players.

Supporting Regulatory Framework

Supporting institutional and regulatory framework at home is vital for domestic banks aspiring for global operations. RBI has suitably changed the country's regulatory framework from time to time to support Indian financial institutions to withstand the competitive pressures placed on them by increasing globalization.

Proper steps have been taken to guide the banking sector to see that the banks pass through this transition phase by and large successfully. The reforms initiated in the banking sector have now reached a crucial stage. Government's stake in some PSBs is reduced and as a consequence public equity in these PSBs is enlarged. This led to greater responsibility on the bank managements since the level of accountability has increased. Pressures of performance and profitability will keep them on their toes all the time as the public shareholders expect good performance along with good returns on their equity. Many PSBs have already started the exercise of cleaning up of their balance sheets by shedding the excess baggage.

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* Speech delivered by V. Leeladhar, Deputy Governor, Reserve Bank of India to Kanara Chamber of Commerce and Industry, Mangalore on March 11, 2005.