Improvements in market discipline also call for greater coordination between banks and regulators. India has been a participant in the international initiatives to ensure improved processes of market discipline that are being worked out in several fora, such as, the multilateral organisations, the BIS, the Financial Stability Forum, and the Core Principles Liaison Group.
By looking closely at business models, we want to increase our understanding of how banks actually make money and become better able to discern high-risk strategies. In our supervision of behavior and culture, we aim to make banks’ senior management more capable and more careful decision-makers. Let me give you two examples.