The Chair placed the agenda of the meeting before the august house and sought the concurrence of this house to move on to the agenda.

1.1 Confirmation of the proceedings of the 16th SAARCFINANCE

Governors’ Meeting

The proceedings of the 16th SAARCFINANCE Governors’ Meeting held in Washington on October 20, 2007 were put to the house for members’ confirmation, which were unanimously approved.

1.2 Review of Progress on SAARCFINANCE Seminars/Symposia/Studies

(Research Projects)

Seminars/Symposia

The Chair observed that as per the decision of the 16th SAARCFINANCE Governors’ Meeting (Washington, October 20, 2007), some of the member central banks would organize seminars during 2008. Sri Lanka informed the house that it would organize a symposium on ‘South Asia’s Recent Growth and Future Prospects’ in August 2008 at the Central Bank of Sri Lanka. Pakistan informed that it would hold a seminar on ‘Basel II Implementation in South Asia’ during June 26-28, 2008. Chairman observed that Secretariat would reconfirm from Bangladesh the date of Seminar.

It was decided that Sri Lanka will hold a seminar on foreign exchange reserve management in place of staff exchange programme on foreign exchange management. The tentative date of this seminar would be August 16, 2008 on the eve of SAARC Heads of the state meeting on August 19-21, 2008. The participation in this seminar will be restricted to SAARC members only. Sri Lanka offered that this seminar would take place in the Centre for Banking which has residential facilities. The secretariat would ascertain from the member countries regarding their interest and participation in the above Seminar.

Research Projects/Studies

Chairman observed that in the 16th SAARCFINANCE Governors’ Meeting (Washington, October 20, 2007) it was decided that the Co-ordinators would prepare a list of research projects of regional importance, which may be shared through an electronic network. Accordingly, member countries forwarded their feedback with regard to undertaking research projects/studies of regional importance during 2008. Afghanistan, Bhutan, Maldives, Nepal and Sri Lanka have indicated that they may not have any research projects during 2008. India reconfirmed that all six research projects mentioned in the agenda will be undertaken. Governor, Pakistan mentioned that the ‘Basel II implementation in South-Asia’ will be the research project after the seminar in June 2008. She further mentioned that research study on ‘Implications of Liberalizing Trade & Investment with India’ prepared by Pakistan may be circulated among the members. This study may be obtained by the secretariat from Pakistan.

1.3 Organizational Issues

1.3.1 Enhancing Staff Exchange Programme

Chairman mentioned that in the 16th SAARCFINANCE Governors’ Meeting (Washington, October 20, 2007) it was agreed that Co-ordinators may prepare training programmes needs for 2008 under Staff Exchange Programme which will be discussed in the Governors’ Meeting. Accordingly, the suggestions of the member countries have been set out in the agenda.

Chairman indicated that in a bilateral meeting with him held on April 11, 2008 Governor of Afghanistan has proposed a few training programmes under staff exchange programme which include internal audit system (preparation of audit manual), balance of payments (preparation of balance of payment manual). Chairman also indicated that Governor Afghanistan and his colleagues would visit India to discuss apart from training needs issues relating to deposit insurance and credit information bureau. While visiting RBI, Governor Afghanistan and his team may also visit training institutes in Chennai and Pune to discuss their specific training needs.

Governor of Pakistan clarified that some of the topics mentioned in the agenda may be undertaken this year and next year. For this year, two programmes viz., inflation targeting and microfinance and SME financing have been identified and invitation to members will be sent.

As regards training programmes Chairman, with the permission of the members, passed the resolution. It was resolved that the training programmes of the member countries will be placed on their respective websites. Any member of SAARC countries may suo-moto avail of the preferred training programme under staff exchange programme, without waiting for a formal invitation and that the host country shall accommodate such nominations.

1.3.2 Operationalization of SAARCFINANCE Training Centre

It was decided in the 16th SAARCFINANCE Governors’ Meeting (Washington, October 20, 2007) that Co-ordinators may develop modus operandi regarding operationalisation of training centre at ‘Centre for Banking Studies’ in the Central Bank of Sri Lanka as a regional training centre for SAARCFINANCE which would be placed for discussion in the Governors’ Meeting. The Chair informed the members that the comments/feedback received from the other member countries on the draft proposal of operationalisation of SAARCFINANCE Training Centre prepared by Sri Lanka have been forwarded to Sri Lanka for consideration. It was resolved that the Members may take initiative in using the Training Centre in Sri Lanka for conducting training programmes on topics of common interest. Resource person from the member countries may be drafted. Expenditure will be borne according to the current standard practice. All countries may take maximum benefit from the proposed regional centre. Sri Lanka invited suggestions from the Members on the programmes that may be conducted in the Training Centre and also invited nominations from the Members for participation in the programmes conducted in the Centre.

1.4 Issues for Technical Discussion

There were mainly two issues for discussion in the technical session. Major points discussed under each of these issues are given below -

1.4.1 Framework on Regional Co-operation on Payments and Settlement System

Chairman indicated that the setting up a SAARC Payments Council (SPC) was discussed at the SAARCFINANCE Governor's meeting in Washington on October 20, 2007 and the Central Bank of Sri Lanka was requested to take the lead role and draft a detailed document with the mission, vision, objective and methodology of operation of the council. On the request of the Chair, Deputy Governor, the Central Bank of Sri Lanka made a brief presentation. She mentioned that the inaugural meeting was held on March 28, 2008 at the Central Bank of Sri Lanka, Colombo. In the meeting, the SAARC Payments Council (SPC) decided to go ahead with an agenda for preparing a road map for developing payment systems in the SAARC region keeping in view international standards. It was mentioned that initially, the roadmap should be for five years and then there would be a one year rolling plan with achievable goals. The first item of the Agenda would be to understand the payment systems in the SAARC region on a comparable basis, assess the appropriateness of existing systems and to estimate the volume of cross border payment transactions in the SAARC countries, which requires the setting up of national payment councils/committees and report programmes quarterly to SAARC Payment Council meetings. The Chairman appreciated in-principle the idea to have a regional payment system. He, however, mentioned that there should not be too much of a capital investment at this stage. He proposed that a draft project report including a budget may be prepared justifying the need for funds which may be discussed at the next SAARCFINANCE meeting in October 2008. It was decided that the SPC Secretariat and the SAARC Secretariat may coordinate further on this work.

1.4.2 Formation of the South Asia Credit Bureau Associations for SAARC Region

Chairman indicated that as per the decision in the 16th SAARCFINANCE Governors’ Meeting (Washington, October 20, 2007), it was agreed that Secretariat may collate material in the experience of credit information bureau in SAARC countries as a status paper, including its legal and institutional set-up, for discussion in the April 2008 Governors’ meeting. Accordingly, Status report, based on the material received from the member countries with regard to their credit bureau was prepared and circulated among members. Chairman further observed that the status paper is a good beginning. The secretariat may coordinate further to include the qualitative aspects in the Paper and present a consolidated report at the next SAARCFINANCE meeting in October 2008. For this purpose, in consultation with the members a common questionnaire may be prepared and circulated among the members along with the objective of the survey, with a view to elicit more useful responses. The SAARC Secretariat to co-ordinate work with relevant Credit Bureaus.

The following action points emerged from the above proceedings of the meeting:

1. Reconfirmation by the secretariat from Bangladesh regarding seminar on Corporate Governance in Banks and Financial Institutions in SAARC Countries.

2. Confirmation from Pakistan by the secretariat on the areas of further collaboration and assistance under staff exchange programme.

3. Secretariat would collect the research study on Trade in South Asian Region from Pakistan and circulate to members.

4. Secretariat to circulate the resolutions passed in the meeting regarding the suo-moto participation of the SAARC member countries in the training programmes of any other member country; and the utilisation of the Training Centre at Sri Lanka for conducting joint programmes.

5. Secretariat to prepare a questionnaire in consultation with the members to include qualitative aspects of the credit information bureau.

6. Sri Lanka to confirm to the secretariat the modalities of seminar on foreign exchange reserve management.

At the end, the Chair thanked the delegates for their active interest and participation in the proceedings. The member Governors thanked the Chair for conducting a very fruitful meeting in a well co-ordinated manner.

The meeting ended with a vote of thanks from the Chair.

17th SAARCFINANCE Governors’ Meeting

April 12, 2008, Washington D.C

List of Participants