the vice - chairman of the federal open market committee, the fed committee that sets monetary policy to promote its statutory goals of full employment and price stability. last week, the committee reaffirmed that it currently anticipates that the federal reserve ’ s federal funds rate target will remain exceptionally low – which i understand to mean at its current level – at least through late 2014. the fomc also voted to provide additional support for economic activity by extending its maturity extension program – popularly referred to as operation twist – through the end of the year. this extension means that we will be buying an additional $ 267 billion of longer term treasury securities, paid for by selling or redeeming the same amount of shorter term treasuries. this action reduces the supply of longer dated treasury securities on the market and lowers longer term interest rates relative to where they would otherwise be in the absence of such a program. that puts downward pressure on corporate borrowing costs and mortgage rates, and supports asset prices such as housing and equities – all of which promotes growth. in addition, the fomc adopted new language to describe its policy outlook, stating that it is “ prepared to take further action as appropriate to promote a stronger economic recovery and bis central bankers ’ speeches sustained improvement in labor market conditions in a context of price stability. ” i will let those words speak for themselves. local economic conditions now let me turn to economic conditions in puerto rico. puerto rico ’ s real, or inflation - adjusted gross national product has declined for the past four years and this has been accompanied by a sharp decline in the real income of island residents. according to a monthly index of economic activity produced by the government development bank for puerto rico, economic activity began to decline as far back as 2005. although the index has been stable for the past several months and this may be a signal that the economic downturn on the island may have ended, a solid recovery has yet to take hold and conditions remain challenging. the job market remains a trouble spot for the island ’ s economy. total employment fell by about 13 percent or roughly 140, 000 jobs, between its peak back in 2005 and mid - 2010. this is nearly double the 7 percent job loss on the mainland. for the past two years, employment has appeared to have bottomed out, but there has been little evidence of recovery. the island ’ s unemployment rate has fallen by more than a percentage point over the past year, but this is not necessarily good news.

usha thorat : urban cooperative banks – evolution of the banks, current issues in corporate governance and challenges in their regulation and supervision text of the late shri r n godbole memorial lecture ( 2006 ), delivered by ms usha thorat, deputy governor of the reserve bank of india, at shivaji university, kolhapur, 6 december 2006. * * * ladies and gentlemen, i am happy and honoured to be here today to deliver the " late shri. r. n. godbole memorial lecture " this year. my thanks to the shivaji university, kolhapur for extending me the invitation to deliver this lecture. i have chosen to speak today on urban cooperative banks - a key sector in the indian banking scene, which in the recent years has gone through a lot of turmoil. while the ordeal is not as yet over for some banks, the sector on the whole is showing signs of looking up. it is encouraging to note that the reserve bank ’ s initiatives towards the revival of this sector – a unique sector blending banking and cooperation – are bearing fruit. talking of cooperation, one cannot but recollect the glory of this wonderful district that we are in today – kolhapur, a leading district in the cooperative movement in maharashtra, famous for its cooperatives. indeed, it is a good time and place to have a detailed discussion on the evolution of the ucbs, governance issues observed in them and the challenges in the regulation and supervision of the sector. i would like to begin with a brief note on the historical perspective on cooperative movement in india and the origin of ucbs, and then move on to the current issues. historical perspective the cooperative movement in india started a century ago with the enactment of cooperative societies act in 1904. interestingly, legal status was conferred on credit societies keeping in view, in particular, the needs of the agricultural sector. nevertheless, sir ibbetson, who piloted the legislation observed : " we recognize that artisans, employees on small pay and other persons in towns may very properly be admitted to the benefits of our legislation ". although joint stock banks opened branches in urban and semi - urban areas, they did not find it advantageous to cater to the banking and credit requirements of the urban middle / lower class comprising small traders / businessmen, artisans, factory workers, salaried persons with limited incomes etc. the inability of joint stock banks to appreciate and cater to the needs of this class of clientele with limited means effectively