core banking solutions and adopt ict solutions for financial inclusion. a growing component of inclusive banking is the lending by mfis that are societies, trusts, cooperatives or " not for profit " companies or non - banking financial companies registered with the rbi. this sector currently covers 8. 32 million borrowers ( sa - dhan report 2007 ). the nbfc segment within this sector accounts for 42. 8 per cent of the borrowers and is the fastest growing segment. interest rates on lending to mfis / nbfcs are completely deregulated ; bank lending to such entities for micro finance is treated as priority sector lending. private sector and foreign banks are observed to be actively supporting this sector, which is also attracting private equity funding and philanthropy funding from outside the country. in order to step up lending to agriculture, in 2004 - 05, government of india launched a special programme monitored by nabard for doubling of agricultural credit, and providing relief to distressed farmers through rescheduling and settlement schemes. a programme of interest rate subvention of 2 per cent on crop loans to farmers was also introduced and this scheme, which is being operated for the last three years, is still in force. in 31 districts identified as distressed, a special package was put in place for interest waiver and rescheduling of principal over a long period to minimise debt burden, together with provision of fresh loans to distressed farmers. government of india and respective state governments share the burden of write off. some state governments have, on their own, introduced farmers ’ debt relief programmes. government of india has introduced a comprehensive recapitalisation and reform package for the rural cooperative credit structure, both short term and long term, as this sector was plagued by overdues and accumulated losses resulting in choking of credit flow. the reform package has financial governance and regulatory components to ensure that the sector once strengthened is self - sustaining. the programme is currently under implementation. measures are also being taken by the government to revamp crop insurance and also introduce weather insurance. reserve bank has modified the prudential accounting norms for classification of asset quality with respect to agricultural loans, keeping in mind the seasonality of crops and cash flows. standing instructions are in place for rescheduling loans in areas affected by natural calamities and disasters. in order to enable small farmers with loans up to rs. 25000 to reenter the credit system, banks have been advised to introduce a simplified one - time settlement scheme

usha thorat : inclusive growth – the role of banks in emerging economies text of the “ independence commemoration lecture, 2008 ” by ms usha thorat, deputy governor of the reserve bank of india, at the central bank of sri lanka, colombo, 28 february 2008. assistance of c. s. murthy, g. srinivasan, asha p. kannan and sundaram shankar in preparing this speech is gratefully acknowledged. * * * ladies and gentlemen, i am delighted to be here in colombo and honoured by the invitation of the central bank of sri lanka to deliver this year ’ s “ independence commemoration lecture ”. it is my proud privilege to join the illustrious list of previous speakers, who have added laurels to this prestigious lecture series. today, i would like to share with you india ’ s experiences on “ inclusive growth ” – a topic which is both current and close to the hearts of public policymakers and central bankers of emerging economies. having chosen my topic, i am faced with the, not so unusual, speaker ’ s dilemma as to from where i should begin. and i thought it is best to begin at the very beginning – some three millennia ago. yes, some three millennia ago!! i refer to the “ shanti mantra ” – a peace hymn – from the “ kato upanishad ” of the hindu scriptures which runs like this : " om sahana vavatu sahanau bhunaktu, saha viryam karawavahai, tejasvinavaditamastu, ma vidvishavahai, om shanti hi shanti hi shanti hi " and translates to : " together may we be protected, together may we be nourished, together may we work with great energy, may our journey together be brilliant and effective, may there be no bad feelings between us, peace, peace, peace " indeed, the significance and importance of the “ inclusive ” concept has been well recognised millennia ago. coming to current times, there is growing realisation that while the “ trickle down ” effect of economic growth no doubt works, it takes too long a time and hence there is a need to focus on inclusive growth. " inclusive growth ", is a little more than just the benefits of growth being distributed equitably and evenly ; it is the participation of all sections and regions of society in the growth story and their reaping the benefits of growth. i. why inclusive growth