it may be necessary to bring in specialists who have knowledge of rural operations, agricultural finance, etc. and are willing to work in rural areas. in this context, i wish to raise a debatable issue. should the psb boards not consider appointing employees who would be willing to serve in the rural areas at lower wages? i think it is high time the psb banks created a differential wage structure for the employees serving in various areas. the spin off benefit of this would be in terms of increased viability of their rural business and increased financial inclusion. c ) role of the top management 17. in a service - oriented industry like banking, the quality of human resources has to be the central plank. unless the organizations leverage the strength of their human resource to bis central bankers ’ speeches the maximum, they would fail miserably in attaining a competitive edge in the global banking arena. this makes the role of the cmd and board very crucial. the hr policy needs to be strategically aligned and connected with business. given the criticality of hr issues, they need to be debated at board level. boards of banks need to spend quality time on formulation and deliberation of strategies involving leadership development, succession planning for critical levels and specialized areas, performance standards, compensation and rewards management, redesign of organization structure, etc. the banks need to have a policy which clearly spells out the short term and long term hr agenda. the cmds of the banks should spearhead and champion the hr functions to reduce people ’ s anxieties and simultaneously seek higher levels of productivity and performance. they should also frame policies which helps them manage the expectations of their staff, whether at the lower level or at the middle management level. road ahead 18. the current decade is already proving to be a challenging one for the hr professionals in banks, particularly for those in the public sector banks. this is because of the significant number of employees retiring during this decade. this not only poses unique challenges but also presents opportunities for hr managers across the industry. at stake is a chance to transform hr practices and create a workforce that can provide individual banks with a strategic edge in an environment that is likely to become increasingly competitive in the days ahead. the “ retirement decade ” provides an opportunity, especially for the psbs, to transform their work force by hiring the right talent, right - sizing and right - skilling them and thereby bringing about a cultural transformation in the functioning of these banks. as the crop of the 70s bid

for their credit needs. financial emergencies, for instance, include unplanned expenditure on business, consumption and marriage, among others, which may not be financed by banks and other institutional agencies. some of the other causes for greater recourse to non institutional sources as identified by the rcf are deceleration in bank credit to households in the context of change in banks ’ behaviour in the 1990s due to their impaired balance sheets and tightening of prudential norms and the slowdown in formal credit to households in the context of the slowdown in agriculture and allied activities that may have induced such households to approach noninstitutional sources to meet their credit requirements. the rcf has however noted that the last round of nsso survey related to the year 2002. subsequently, several policy initiatives have been taken by the government / reserve bank to improve the credit flow to agriculture and the needy sectors. these measures had a significant positive impact on financial inclusion as revealed by the data for subsequent period. challenges in achieving fi for inclusive growth looking at the findings of these surveys and analysis, it is quite clear that financial inclusion has to be an urgent national priority if we are to achieve inclusive growth. the major challenges in banks extending services to the excluded are large costs of covering the huge numbers ( cost of enrollment ), relative high maintenance costs for such accounts, small ticket size for each transaction, need for communication modes suited to the illiterate and in local language, affordability of the product or service, need for local acceptance and involvement of locally acceptable personnel, need for large scale coverage including over difficult geographic terrain and areas where there is no electric power or normal telecommunication facilities. further, as is now very obvious from the recent surveys by aidis and iims, the challenge also lies in offering to low income households and unorganized enterprises a simple loan product which is not based on or linked to the purpose of the loan, the collateral or assets held or income earned by the household but is purely based on cash flow and credit record of the household. vision 2020 looking to 2020, it is even more apparent that the task of banking the unbanked will be truly daunting. nearly 600 million new customers ’ accounts will have to be opened and serviced through a variety of channels leveraging on it. rbi initiatives for fi in the annual policy for 2005 - 06, for the first time the word financial inclusion was used and banks were asked to open “ no frills ” or a basic