section of the population remained financially excluded. as i mentioned before, though various measures initiated by the regulator / government in the post - independent period resulted in impressive gains in rural outreach and volume of credit, the structure suffered from inherently weak governance. the achievements were “ quantitatively impressive, but qualitatively weak ”. due to the target driven approach to social banking, the initiatives were not part of the business strategy of banks. the effort on the part of the banks was always aimed at somehow meeting bis central bankers ’ speeches the lending targets, mostly at subsidized rates of interest, or with subsidy from the government under various government directed schemes. 7. overtime and especially, in the wake of the adoption of the rbi encouraged structured financial inclusion framework adopted by banks over the last few years, there has been substantive development in the architecture and thinking on financial inclusion. there has been a growing realization that there is no “ one - size - fits - all ” financial inclusion strategy which can be cloned over the length and breadth of our country, although few core conditions are essential to maximize the benefits derived from such a strategy. effective governance is the most predominant of these conditions and is, in fact, a sine qua non for achieving financial inclusion. 8. effective financial inclusion cannot be achieved until the entire structure of the financial inclusion programme is supported by good governance. good governance in our financial inclusion programme is supposed to be achieved by having a planned and structurally integrated framework, supported by a policy vision. as a first step towards creating this governance structure, effort has been made to precisely define financial inclusion and all ingredients associated with it. in the subsequent paragraphs we shall be presenting the entire governance structure of our financial inclusion programme, the progress achieved so far and issues and challenges that need to be tackled to make it a success. ( a ) definition of financial inclusion 9. financial inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular, at an affordable cost, in a fair and transparent manner, by regulated, mainstream institutional players. approach to financial inclusion ( a ) a bank led model 10. we have adopted a bank - led model for financial inclusion, which seeks to leverage on technology. our belief has been that in view of the geographic expanse of our country, the success of financial inclusion initiatives would depend on the solution being ict - enabled, with the market participants developing

##patory approach iv. robust internal checks and control v. knowledge sharing at industry level 46. in general, governance is administered in three ways viz. through market forces, through governing body or through network. in an organizational set up, it ’ s about the rules and regulations that guide all activities. regulatory governance reflects the emergence of decentered and mutually adaptive policy regimes which rest on regulation rather than service provision. from the perspective of the governance framework guiding the financial inclusion process, banks need to devise their own strategies to ensure that an effective and conducive governance regime is in place to ensure attainment of the fi goals. conclusion 47. good governance is at the core of improving the delivery of public services. good governance provides a mechanism for linking inclusion, decision making, and accountability. problems in infrastructure, critical for building an inclusive india, can often be traced back to lack of ownership and poor governance. many of the initiatives launched over the years for achieving the objective of rapid growth coupled with poverty alleviation and inclusiveness have failed to achieve their goals because of lack of ownership, ineffective governance and insufficient accountability at various levels. without effective implementation, even substantial government expenditure results in limited success. 48. the success of banks cannot be measured simply in terms of profit their banking operations generate. the banking services are equally about addressing the financial needs of various stakeholders. not only is it about making the system more inclusive, it is also about protecting the financial consumer, through improved awareness and better grievance redressal mechanisms. the mantra of good corporate governance, therefore, does not just encompass ethics and business practices followed by the bank or its personnel ; it has to go beyond compliance with regulatory directives. it must consider fair and acceptable behavior, among others, to those who are more vulnerable, even if it is at some cost to their bottom lines. 49. for our financial inclusion initiatives to succeed, it is important for banks to craft new policies on governance and compliance, wherein good governance should be the primary responsibility of the bank ’ s board of directors and its senior management. while we respect the mandate of the leadership of each bank to make strategic decisions as it is these choices that differentiate one bank from another as a business proposition ; however, the governance perspective that we seek must be fundamentally entrenched as a core competency across all banks. 50. there is a causal linkage between growth and good governance. the deficit of governance can impair and impede development. i am