"RBI''s policies increasingly recognise global developments, but their adaption to such developments, in the Indian context, is tailored to the prevailing status of institutions and markets, immediate relevance and the evolving needs of the country. As an example, the function of financial supervision continues with RBI, but in 1994, this function attained a semi-independent status through the establishment of an overseeing authority in the Board for Financial Supervision - but within RBI," he said in a speech posted on the RBI website.

Asked whether the RBI was reasonably confident that it could meet challenges and maintain present growth momentum with stability, he said: "There are grounds for optimism and these include democratic values, financial system stability, skilled manpower, technological capabilities, demographic dividends, large and growing entrepreneurial class, and penchant for innovation."

"The single most critical determining factor for the future would, by all accounts, be the improvements in governance that impacts personal security, property rights, business environment, and above all, a sense of fairness in the conduct of public policy."

India has grown at an average rate of 8.6 per cent in the past four years and is expected to expand at 8.5 per cent in 2007-08, he added.