monetary policy, which remains the snb ’ s priority. we therefore have to live with this risk and try to reduce it without getting rid of it completely. to this end, the governing board pursues a strategy of maximum diversification across the currencies at its disposal. it is important to remember that the snb ’ s activities must primarily be measured against the effectiveness of its monetary policy as well as the financial return on its investments. conclusion to conclude, let me reiterate two points that have come up several times during my remarks. first : while the snb is a global investor, it is also a special investor and rather far removed from the classical definition that applies in the private sector. its investments are the direct result of its monetary policy. that policy continues to have priority over purely profit considerations in financial terms. the snb must also meet specific requirements when selecting investments ; return is obviously a factor, but it also needs to take risk and market liquidity into consideration. finally, it must invest a significant volume of funds without disturbing the markets. this can prove difficult, and requires transitional periods in order to achieve the desired allocation. second : the snb tries to pursue the most efficient investment strategy possible. the fact that several central banks inform themselves about and are inspired by our experiences goes to show that we are sometimes an example for them. in so doing, the snb also tries to be as transparent as possible, thereby meeting its duty to inform the public. the investment strategy is largely made public, and we are one of the few central banks to publish its results on a quarterly basis. ladies and gentlemen, i have now come to the end of my remarks. i would like to thank you for your kind attention, and i would be happy to answer any questions you might have. bis central bankers ’ speeches slide 1 slide 2 bis central bankers ’ speeches slide 3 slide 4 bis central bankers ’ speeches slide 5 slide 6 bis central bankers ’ speeches

commercial bankers. as mahatma gandhi said, the test of every public policy decision should be, “ how is this decision going to affect the poorest person in the country? ”, which is the same as asking yourself, “ is this decision that i am taking “ going to touch hearts and spread smiles ” among the less privileged people in the country. ” 5. the reserve bank ’ s responsibilities include bank regulation and supervision and oversight of banks ’ customer service. our endeavour in fulfilling these responsibilities is to support growth and enhance welfare – in other words “ touch hearts and spread smiles ”. what i thought i would do for this oration is to review some of the important policy initiatives of the reserve bank over the last two years in the area of bank regulation and supervision and explain how they have been informed by the goal of touching hearts and spreading smiles. given the limitations of time, i will restrict myself to just five of the several policy actions. bis central bankers ’ speeches micro - finance 6. when it started off in the 1980s, the development of the micro - finance sector was primarily led by the bank - shg ( self - help group ) model, with the shgs operating as collective liability vehicles with responsibility for maintaining credit standards and enhancing credit discipline among the members. 7. the shg model was handicapped by inherent scalability issues, and thereby yielded the “ last mile ” space to microfinance institutions ( mfis ) which represent a more formal, structured and profit oriented approach. in some ways, the growth of the microfinance sector has been a remarkable success story of recent years ; in some other ways, that very growth has also raised concerns about the quality of income generation support mfis were offering. in particular, allegations about usurious interest rates, coercive recovery practices and multiple lending led the government of andhra pradesh, a state that accounted for as much as 40 per cent of the total microfinance activity in the country, to promulgate an ordinance in october 2010. the ordinance, subsequently converted into an act, requires all mfis operating in the state to register on an annual basis with the state government. the law stipulates that the total interest cost cannot exceed the principal, and seeks to further protect borrowers from getting enticed into an unviable debt burden by restricting multiple lending by mfis. 8. the andhra pradesh law brought the mfi activity in that state to a stand still ; several other states