in 1969 to more than 89, 000 today, spread across the length and breadth of the country. the accompanying chart and graph show population group - wise distribution of bank branches of scheduled commercial banks, including rrbs, over all these years. also see / branches of scheduled commercial banks ( pdf ) despite all these efforts, a significant proportion of the households, especially in rural areas, still remained outside the coverage of the formal banking system. it is estimated that about 40 % of indians lack access even to the simplest kind of formal financial services. the major barriers to serve the poor, apart from socioeconomic factors such as lack of regular income, poverty, illiteracy, etc., are the lack of reach, higher cost of transactions and time taken in providing those services. products designed by the banks are not tailored to suit the needs of low - income families. the existing business models do not pass the test of scalability, convenience, reliability, flexibility and continuity. also see villages covered ( pdf ) branches vs business correspondents ( pdf ) in india, the term financial inclusion first featured in 2005, when rbi, in its annual policy statement of 2005 – 06, while recognizing the concerns in regard to the banking practices that bis central bankers ’ speeches tend to exclude rather than attract vast sections of the population, urged banks to review their existing practices to align them with the objective of financial inclusion. national commitment moving towards universal financial inclusion has been both a national commitment as well as a public policy priority for our country. to achieve the ultimate objective of reaching banking services to all the 600, 000 villages, financial inclusion has to become a viable business proposition for the banks. for this to happen, the delivery model needs to be devised carefully so as to move from a cost - centric model to a revenue - generation model. this will help in providing customers with quality banking services at their doorstep and at the same time generating business opportunities for the banks. this is sustainable only if delivery of banking services, at the minimum, includes the following four products : a savings - cum - overdraft account a remittance product for electronic benefits transfer ( ebt ) and other remittances a pure savings product, ideally a recurring deposit scheme entrepreneurial credit in the form of a kisan credit card ( kcc ) or a general credit card ( gcc ) rbi has been undertaking financial inclusion initiatives in a mission mode through a combination of strategies ranging from provision of new products, relaxation of regulatory guidelines and

rajeshwar rao : ownership and governance – building the edifice for digital innovations remarks by mr rajeshwar rao, deputy governor of the reserve bank of india, at the mint annual banking conclave, mumbai, 15 december 2021. * * * the inputs provided by shri navin nambiar and shri pradeep kumar are gratefully acknowledged ladies and gentlemen. thank you for inviting me this evening to the mint ’ s annual banking conclave. the organisers have quite aptly selected an extremely topical and contemporary theme, i. e., future of banking : navigating a digital opportunity for this year ’ s conclave. during the previous edition of this conclave, i remember governor shaktikanta das speaking about digital disruptions and blurring of boundaries between traditional banks and fintech & bigtech. looking at the constellation of speakers who have been engaging with you, i am sure you all have had an extremely enlightening discourse on several of the emerging issues during the conclave. 2. the technological and digital innovations have improved the efficiency, productivity, and competitiveness in the delivery of financial services. their role in furthering the financial inclusion and reducing the cost of financial intermediation is well recognised. however, such innovations have also given rise to newer challenges for all stakeholders. while customers face issues of mis selling, data security and privacy as well as identity theft problems, regulators and supervisors need to increasingly engage with issues around customer protection, ethical conduct, regulatory arbitrage, and concerns about financial stability. in turn, the regulated entities need to be on their toes to face up to everchanging competition and business disruptions through technology driven innovations, requiring them to fine - tune and sometimes alter their business plans, re - orient their strategies and manage the concomitant risks. 3. given this backdrop, i thought i could briefly focus the spotlight on business conduct and governance issues in financial services, which assume greater relevance in times of innovation, change and business disruptions. these in my view are the key soft pillars which build the edifice of a successful financial institution, more so in these challenging times. in particular, there is a need to reflect on the role and expectations from the governance architecture viz., the board and its committees, the independent directors and the assurance functions in banks and other financial institutions. 4. before i talk about governance related issues, let me briefly dwell upon the concerns around the ownership and corporate structure for private sector banks drawing