comprehensive financial services for small businesses and low income households under the chairmanship of dr. nachiket mor a director on the rbi central board of directors. the mandate of the mor committee is to frame a clear and detailed vision of financial inclusion and financial deepening in india and to lay down a set of design principles that will guide the development of institutional frameworks and regulation for ensuring these outcomes. 6. financial inclusion is defined by the rbi “ as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as the weaker sections and low income groups at an affordable cost from mainstream financial institutions. ” 7. in january 2010, the reserve bank advised all public and private sector banks to submit a board - approved three - year financial inclusion plan ( fip ) starting in april 2010. they were advised to devise fips congruent with their business strategy and comparative advantage and to make fips an integral part of their corporate plans. these plans include : self - set targets for rural brick & mortar branches opened ; bcs deployed ; coverage of unbanked villages with population above and below 2, 000 through branches / bcs / other bis central bankers ’ speeches modes ; no - frills accounts opened, including through bc - ict ; kisan credit cards ( kcc ) and general credit cards ( gcc ) issued ; and other products designed for financially excluded segments. banks were advised to integrate the board - approved fips with their business plans and to include the criteria on financial inclusion as a parameter in the performance evaluation of their staff. 8. we have adopted a planned and structured approach to achieve financial inclusion through the financial inclusion plans, as a self set targeted intervention with measurable and monitor able outcomes. the implementation of these plans is closely monitored by the reserve bank on a monthly basis through a quantitative reporting format. the qualitative aspects of the fips are monitored through a qualitative report submitted by banks every quarter. periodic monitoring of progress – quantitative and qualitative parameters. these board approved plans are the subject of an annual comprehensive review - deputy governor dr chakrabarty holds one to one meetings with cmds of major banks to discuss the progress made by them against their own self set goals, the barriers to progress, the initiatives of their banks and the way forward. rrbs, having migrated to cbs in the end of 2011, have also formulated similar comprehensive fips. progress : 9. a snapshot of the

, this remains relevant even today, in fact more today, post crisis. too much of leverage, too much of liquidity, too much of complexity and too much of greed – they all have led to the crisis. it is now being argued that too much of finance is also not conducive to growth. recent studies 8 suggest that while at low levels a larger financial system leads to higher productivity, beyond a point, more banking and more credit result in lower growth. further, it is also argued that fast growing financial sector can be detrimental to the aggregate productivity growth. moderation in approach, therefore, is an important lesson. takeaway 2 : models are not absolute in the run up to the crisis, there was an excessive reliance and almost a blind faith that models convey absolute truths. entire risk management systems were built around this belief. post crisis, participants have woken up to the harsh reality that models do not fully reflect the realities of life and excessive reliance on quantitative models is fraught with risk. exact sciences such as physics are governed by nature ’ s laws that are immutable and lead to definite and predictable results. finance on the other hand, is governed by capricious human behavior and biases which cannot be easily modeled. to an argument that models with all their limitations are better than not having any, nassim taleb has said “ you are worse of relying on misleading information than on not having any information at all. if you give a pilot an altimeter that is sometimes defective he will crash the plane. give him nothing and he will look out the window ” knowing the shortcomings of the models is, therefore, extremely important for their judicious usage. takeaway 3 : finance should serve the real sector and not the converse while it is agreed that financial system furthers the economic development by enabling efficient allocation of capital and risk, the ultimate objective of finance, which is the furthering of economic development should not be lost sight of. in the period prior to crisis, the financial activity grew so much that the umbilical cord between financial and real sectors was severed and the finance started to exist for its own sake. the dangers of such a scenario have been quite emphatically conveyed by the crisis. with these thoughts, i conclude my address. i thank you all for your patient hearing and wish you all the best in your future endeavors. references : acharya, shankar ( 2012 ) “ india - after the global crisis ” cecc