deepali pant joshi : consumer protection – agenda for inclusive growth address by dr deepali pant joshi, executive director of the reserve bank of india, at the national seminar on “ consumer protection – agenda for inclusive growth ”, new delhi, 24 july 2013. * * * thanks to smt. sonali sengupta, general manager for presenting the speech at assocham, new delhi. assistance rendered by mr. bipin nair, assistant general manager, smt. mruga paranjape, manager is gratefully acknowledged. i congratulate assocham on the timely initiative of hosting this event and bringing to the centre stage of debate very critical issues as customer empowerment and financial inclusion. the “ post crisis ” world is governed by a new paradigm of customer empowerment. the financial crisis has highlighted the importance of financial consumer protection for the longterm stability of the global financial system. rapid increase in the use of financial services brings into sharp salience the need for strengthened financial regulation and consumer education to protect and empower consumers. consumer empowerment is a central goal. education of consumers through information disclosure or through consumer literacy is utilized as a means to even out asymmetries of bargaining power between consumers and financial services providers. in the area of consumer credit and financial literacy, investment empowerment relies on the consumers ’ ability to understand complex financial products and their knowledge and experience of using such products and services. all financial products contain risks and also offer rewards. financially literate consumers are individuals who are equipped to assess risks and to make informed decisions about the suitability of financial products to their situation. there are differences between individual consumers. this granularity arises due to the differences in incomes of consumers. the largest issue to be tackled is an asymmetry of bargaining power between the financial services provider and the consumer of services. the consumers are always the weaker parties in need of protection. consumers need to be enabled to navigate the financial markets to make choices beneficial to their needs. they should be able to understand complex financial products and should be equipped with the knowledge and skills to assess risks and make informed decisions about the suitability of financial products to their situation. a well - functioning consumer protection regime provides effective safeguards for retail financial services consumers while empowering consumers to exercise their legal rights and fulfil their legal obligations. the banking ombudsman scheme provides clear consumer protection rules with regard to banking products and services. the necessary institutional arrangement for grievance redress is in

policies specified that banks could establish a new bank branch in a location with one or more bank branches only if they set up four branches in a location with no new bank branches this regulatory prescription ensured that banks opened rural branches in states where financial development was lower to address the regional inequities in development. their results to evaluate the impact of a new rural branch on poverty suggested that a one percent increase in the number of banks in rural locations reduced rural poverty by 0. 36 % per cent and increased total output by 0. 55 % per cent rural branch expansion also increased non primary sector output and non - agricultural employment. these favourable effects show the positive influence of bank branches on economic bis central bankers ’ speeches development banks to the 1990s disbursed a greater share of credit to the less developed states this trend reversed after the 1990s. iii. in the annual policy statement for 2013 – 14, banks have been advised to consider frontloading ( prioritizing ) the opening of branches in unbanked rural centres over a three year cycle co - terminus with their fips. this is expected to facilitate faster branch expansion in unbanked rural centres. “ step into a bank step out of poverty is our central message ” iv. business correspondent / business facilitator model. in january 2006, the reserve bank permitted banks to utilise the services of non - governmental organizations ( ngos ), micro - finance institutions ( other than non - banking financial companies ) and other civil society organisations as intermediaries in providing financial and banking services through the use of business facilitator and business correspondent ( bc ) models. the bc model allows banks to do “ cash in – cash out ” transactions at a location much closer to the rural population, thus addressing the last mile problem. as on march 31 2013, banks have reported deploying 1, 95, 380 bcs which covered 2, 21, 341 villages. v. introducing technology. to ensure sustainability and scalability of business model, technology was adopted. it leads to higher costs at initial stage however ; it brings better opportunities and optimization of result. the uid is also good instrument of connecting to all the people once it gets effectively operational. vi. the direct benefit transfer scheme and the adhar number are going to be very significant in the years to come the rbi has accepted adhaar as a proof of identity and as fulfilling kyc requirements 1st of january, 2013. nearly 11 lakh beneficiaries have received the benefit