could be a successful mode of credit delivery. hence, there is a need for promotion of self - help groups ( shgs ) with greater linkage with banks. in this regard, nabard has an important role to play, not only in promotion of shgs, but also in capacity bis central bankers ’ speeches building, along with sidbi and concerned state government agencies. another area where there is substantial scope for expansion is low - cost housing. expansion of housing loan remains poor as mortgages cannot be created in many parts of nes. however, banks can explore innovative structures for housing loans with a greater emphasis on group lending. seventh, in any plan for financial sector development, the physical presence of a bank branch is important. but the topography of the region, the dispersal of population, transport bottlenecks and law and order conditions in some areas inhibit branch expansion other than in certain commercial centres. hence, all the stake - holders – banks, state governments and the reserve bank – need to work in close co - ordination for increasing banking penetration and promoting financial inclusion in the region. conclusion to conclude, the north - eastern region has immense potential. the need, therefore, is to identify the opportunities and recognise the challenges to work towards a sustainable and inclusive growth of the region with greater penetration of the formal financial sector. bis central bankers ’ speeches

significantly more difficult ; how much of a physics lecture would you have to pay a taxi driver to drive you to bandra ; moreover would the taxi driver accept a physics lecture in payment ; perhaps you would have to lecture a student, and get the student to sing to the taxi driver … you get the point, transacting becomes difficult as hyperinflation renders money worthless. hyperinflation also has redistributive effects, destroying the middle class ’ savings held in bonds and deposits. the horrors of hyperinflation in austria and germany in the 1920s still make scary reading. so clearly, no one wants hyperinflation. but what if inflation were only 15 percent per year? haven ’ t countries grown fast over a period of time despite high inflation? the answer is yes, but perhaps they could have grown faster with low inflation. 1 after all, the variability of inflation increases with its level, as does the dispersion of prices from their fundamental value in the economy. this makes price signals more confusing – is the price of my widget in fact, in a seminal paper, fischer ( 1993 ) presents cross - country evidence to show that growth is negatively associated with inflation, and the causality runs from inflation to growth. bis central bankers ’ speeches going up because of high demand or because of high generalized inflation? in the former case, i can sell more if i produce more, in the latter case i will be left with unsold inventory. production and investment therefore become more risky. moreover, high and variable inflation causes lenders to demand a higher fixed interest rate to compensate for the risk that inflation will move around ( the so - called inflation risk premium ), thus raising the cost of finance. the long term nominal ( and real ) interest rates savers require rises, thus making some long - duration projects prohibitively costly. these effects kick in only when inflation is noticeably high. so it is legitimate to ask, “ at what threshold level of inflation does it start hurting growth? ” unfortunately, this question is hard to answer – developing countries typically have higher inflation, and developing countries also have higher growth. so one might well find a positive correlation between inflation and growth, though this does not mean more inflation causes more growth. for this reason, the literature on estimating threshold effects beyond which inflation hurts growth is both vast as well as inconclusive. most studies find that double digit inflation is harmful for growth but are fuzzier about