question of “ access. ” direct intervention to build financially inclusive system is critical as one recognizes fully ( i ) financial markets failures and imperfections such as information asymmetries, lack of sensitivity to gender and redistributive dimensions of resources and wealth and high transaction costs etc. ; ( ii ) high price and non - price barriers such as lack of credit history and collateral and connection ; and ( iii ) other constraints such as lack of literacy and entrepreneurial skills, etc. 4. over the years, there has been substantive development in the architecture and thinking on financial inclusion. while there is no “ one - size fits all ” financial inclusion strategy or approach but it is important to recognize few core or necessary and sufficient conditions that are needed to maximize the benefits derived from such strategy. 5. at the outset, it is critical to understand the size and dimension of financial exclusion. despite complexities of estimation, a recent study 3 concluded that average level of financial an alternative definition of poverty ( $ 2 a day ) gives an estimate of 2 billion poor in asia. however, for monitoring progress of mdgs, world bank uses the $ 1 / day definition as it reflects extreme poverty. the world bank, global monitoring report, 2007. beck, thorsten, asli demirgc - kunt, and maria soledad martinez peria ( 2007 ) " reaching out : access to and use of banking services across countries. " journal of financial economics 85 ( 1 ). exclusion, as measured by the percentage of the adult population with access to an account with a financial intermediary, in poor developing countries is as high as the level of financial inclusion in advanced industrialized countries where it is rare not to have at least some access to basic financial services in remote parts. in developing countries, level of financial exclusion is steepest in sub - saharan africa ( a reflection of extreme poverty and difficult economic condition ). situation in asia, present a mixed picture. south asia ( average access rate being 31 percent ) lags behind in expanding financial access relative to south east asia ( average access rate being 47 percent ). advanced transition economies of central europe have progressed well in rebuilding access. there has been relatively little progress made in central and south america despite a relatively robust economic base, particularly among larger countries. 6. to design strategy and policies, there is further need to understand what the reasons for exclusion are? is it voluntary or pure denial of services and what the barriers of access to finance are

only about one fifth of countries will achieve the target increase ; among low income countries ( lics ), only about one - tenth will make it. in overall terms, east asia will meet the goals as it has countries such as china and thailand, which have already made it. at the other end cambodia and png are seriously off track. in general, middle income countries ( mics ) are much better positioned to achieve the mdgs than the low income countries ( lics ). the mics will still have 280 million people living on less than $ 1 / day and 870 million people living less than $ 2 / day. there are 59 top and high priority countries identified by undp where failed progress and terribly low starting levels undermine many of the goals. now i turn to the question : what needs to be done in the next ten years i. e. until 2015 by different partners in this business. the achievement of the development goals will require rising above current trends and accelerating the pace of development and doing so swiftly. there is a need to scale up the action and there are three ways to do so. 1 ) accelerating and deepening reforms to achieve stronger growth, 2 ) empowering and investing in poor people - stepping up action to improve the delivery of services affecting hd, 3 ) matching stronger developing countries efforts to spur growth and improve service delivery to poor people with stronger support from developed countries. what is required by each of the partners in this compact is briefly outlined in the following paragraphs. developing countries : developing country policies have improved most notably in asia but also in many countries in sub - saharan africa. but public sector governance remains the weakest area of the reform agenda in most countries. institutional dimensions of reform are critical both for good macroeconomic management as well as delivery of services. a ) economic and financial policies the developing countries should continue to pursue ; • prudent fiscal management and sound public financial management for reducing vulnerability to crises. • outward - oriented strategies by reducing tariff and non - tariff barriers and trade liberalization. • deregulation and strengthening institutions - especially property rights, rule of law. • implement stronger and deeper financial sector reforms to channel savings to productive uses and broaden access to finance. b ) human development • allocate more resources and ensure more effective use of these resources for accelerating hd. they can increase the impact of existing spending by proper targeting of subsidies. • put in place well targeted social safety nets that protect poor and vulnerable. • em