come out of thin air. they were born out of the disastrous economic performance of the region during the 1980s, and – 3 – the realization that only dramatic improvements in economic policies would suffice to allow growth and prosperity to take hold. first, there has been a general acknowledgment, and recent reinforcement of the lesson, that prudent fiscal policy is crucial to economic stability, and several of the economies of the region have made significant strides in this direction. while much is left to do in this sphere, it does appear that many countries have learned the benefits of prudent fiscal policy. fiscal deficits in most countries in the region have dropped, and in cases where they have not yet declined, serious attention toward achieving improvements is being mustered. improvements in budget balances have not been achieved without pain. in many countries government payrolls have been slashed, generous transfer and subsidy programs have been cut, and social expenditures have had to be reduced. on the other hand, the realization has become widespread that in the absence of such budget - cutting measures, employment and wages would become even more depressed. moreover, people have found that many of the actions taken to cut budgets, including privatization of money - losing state enterprises, has led to better service and an improved quality of life. second, there has been a substantial dismantling of the controls imposed by government over private sector prices and wages. it is now widely understood that excessive budget deficits and money creation are the root causes of inflation, and controls over private prices have been generally abolished. governments also have largely scaled back their role in private wage negotiations as well. public controls on privately contracted interest rates and other financial market prices also have been eliminated for the most part. finally, exchange rates in many latin american countries have become more flexible, and where the government still intervenes in foreign exchange markets, there is a greater understanding that such intervention must be underpinned by appropriate fiscal and monetary policies. third, the role of the government in other aspects of the economy has been substantially diminished, with an accordingly greater scope allowed for private activity and for competition from abroad. internally, many countries have privatized major businesses. the privatization of telebras, the brazilian telephone company, is a prominent recent example, and privatization has proceeded even further in other latin american countries. such privatization has in many cases been complemented with legislation opening particular sectors to greater and fairer competition. additionally, trade barriers have been removed in many

conducting a credit appraisal, developing a proper understanding of the business cycle and analyzing problems is a lot easier when compared to small businesses, which often do not follow a set business cycle, are too dependent on idiosyncratic events and where promoters are not in a position to bring additional equity quickly. in this decade of retirements for the psbs, the number of trained personnel has been dwindling very fast while the relatively inexperienced bottom rung does not possess appropriate skill - sets to lend to the msme sector, which is perceived to be risky and costlier to service. 7. to overcome this human resource deficit in the banking sector, we at the reserve bank of india have embarked upon a fairly ambitious national level skill building programme for the bankers titled national mission for capacity building of bankers for financing msme sector ( namcabs ) in july 2015. a major facet of the namcabs initiative is “ training the trainer ”, which is intended to serve as a force - multiplier. i am happy to state that close to 1800 bankers have undergone an intensive entrepreneurial sensitivity and skill building programme in the last 8 months. i would like to re - emphasize the “ entrepreneurial sensitivity ” content of the capacity building efforts, as this is the key to responding to the lifecycle needs of the small and medium enterprises. 8. of course, the banking system needs to walk a fair bit to create an environment where an aspiring entrepreneur is more worried about embracing technology, improving productivity and efficiency at his / her unit rather than worrying about the availability, timeliness and adequacy of finance. this would require more enablers in the nature of a more robust and responsive financial infrastructure. there are several initiatives on the anvil towards this objective. let me give a peek into some of them : 9. timely availability of credit from the formal financial sector is a very critical issue which the small entrepreneur faces. i receive a fair bit of complaints about the cumbersome processes involved, documentation requirements and concomitant delays that are associated with getting finance from the banks. we have issued guidelines on maintaining electronic records of the loan applications from msme borrowers and some of the banks have implemented a credit proposal and tracking system. however, that has not been universally implemented. under the circumstances, the potential borrowers continue to face uncertainty over quantum and timelines after making a loan application. to ease the process, bridge information gaps, enable monitoring of processing time and reducing transaction