through interest rate and credit channels. third, we, as the monetary authority, feel that increasingly competitive financial markets are playing enhanced feedback role in the financial system. they help us not only in terms of information content on yield curves, but also in gauging market expectations and designing better communications. fourth, while competition in the domestic markets is in many ways, enhancing effectiveness of the monetary policy, the increasing integration of our financial sector with global markets is, arguably, making the monetary policy transmission somewhat more complex than before. my co - panellist governor axel weber made a mention of this aspect in his intervention. finally, let me also respond to professor jacob frenkel who raised the general issue of focussing on the core - inflation in policy and not the headline inflation in spite of persistence of high oil prices for a long period. in india, we could not consider core - inflation for several reasons, especially because the two major sources of supply shock, food and fuel, account for a large share of the index. in our case, pass through of higher oil prices has been halting and not full. thus, the headline inflation in our country in a way understates the problem. so, in our monetary policy communications we emphasised the fact that there is clear evidence of a permanent component in the oil price increase, and hence the headline inflation may be understated till that component is fully passed through. while the permanent component is judgmental, broad magnitudes could be perceived and articulated. such an explanatory approach to headline and underlying inflation pressure in monetary policy has added credibility to the policy and influenced and guided the inflation expectations in india. thank you.

business correspondents ( bc ) to be employed ; coverage of unbanked villages with population above 2000 as also other unbanked villages with population below 2000 through branches / bcs / other modes ; no - frill accounts opened including through bc - ict ; kisan credit cards ( kcc ) and general credit cards ( gcc ) ; and other specific products designed by them to cater to the financially excluded segments. banks were advised to integrate 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. the implementation of these plans is being closely monitored by the reserve bank. vii. measures specific to ucbs : ucbs have been advised to step up their financial inclusion efforts by utilizing appropriate technology. certain other measures such as enhancing maximum limits on unsecured loans and advances, revising credit limits permitted for individual housing loans, extension of area of operations for ucbs, permitting lending to shgs and jlgs and permitting the use of bcs have been undertaken to further the financial inclusion drive. untapped potential for the ucbs – financial inclusion the client profile of ucbs today predominantly consists of priority sector segments viz. small business establishments, ssi, retail traders, self - employed etc., who would not, normally, find it easy to access commercial banks. the priority sector loans of the sector are today at 46 % as against the prescribed target of 40 %. nearly 90 % of the loan accounts of the sector are less than rs five lakh in value. to this extent, ucbs are already into financial inclusion. however, there remains a huge hidden potential waiting to be tapped. given the large number of small urban co - operative banks, and with 271 districts not having any presence of ucbs, there exists a huge potential for ucbs to increase their spread and business and also participate in the national mission of financial inclusion. given their respective sizes, it may well appear to be a david vs. goliath contest as ucbs need to compete with larger commercial banks in vying for the unbanked pie. however, there exists a distinct first mover advantage which the ucbs have, in addition to their vast customer base. ucbs need to capitalise on this advantage, else their potential customers will be covered by the commercial and regional rural banks and ucbs will lose a good business opportunity. initially, it may appear that taking banking services to the sections constituting the “