the region, the usual suspects that could trigger a financial crisis must be avoided. this implies sustained emphasis on fiscal consolidation, low inflation, appropriate policies to manage volatile capital bis central bankers ’ speeches flows, and a sustainable balance of payments. the approach to reforms, going forward, must seek to balance the “ growth and efficiency gain ” goals on the one hand with “ growth and equity goals ” on the other. fourth, since national policies at times may not be adequate in a globalised world, voice of countries in the region in global governance may have to be collectively raised. global safety nets and global surveillance would have to be seen as an integral part of financial stability initiatives. fifth, financial sector development would require a cautious approach but without stifling innovations, as the financial markets remain incomplete in the saarc region. finally, i must thank now all involved in organising this symposium, having worked tirelessly for making this event a unique experience. i thank governor dr. subbarao for his guidance for the conduct of the event. our thanks to the distinguished guests from the saarc region for making the discussions so lively. i thank the senior management of the reserve bank who are present in full strength. the burden of organisation primarily fell on the regional director of kerala and the staff from our kochi and trivandrum offices. our deepest appreciation to all of them. thanks are due to the organising teams from the department of external investment and operations ( deio ) and department of economic and policy research ( depr ) from the central office of the rbi. i thank the government of india and government of kerala for their support. i thank the kerala police for providing security coverage. special thanks are due to the hotel staff and management of zuri resort and ergo, the service provider for making excellent arrangements. i once again thank all those who have been associated with this conference directly or indirectly. thank you. bis central bankers ’ speeches

third to 70 per cent. this represents increase of 50 million middle income households in rural areas. • retail credit has grown in the last four years by nearly 50 per cent per annum mostly at urban centres. as incomes increase, there is growing demand for retail credit in rural areas that is perhaps being met by the informal sector. anecdotal evidence suggests that moneylenders in rural areas face more competition from other moneylenders rather than from the banks. • with the growing rural connectivity and tele - density, a host of non - farm activities are mushrooming in the rural sector. currently, the rural market accounts for 53 per cent of the fast moving consumption goods ( fmcg ) and 59 per cent of the durable market in india. the rural consumers represent more than 50 per cent of the country's ` consuming classes '. part – iii : the way forward – some thoughts having discussed the rural urban divide in banking and the potential in rural banking, the question that remains to be addressed is – how can banks meet the challenges of banking in the hinterland? ( i ) to start with, i believe, fuller utilisation of existing capacity can itself give huge dividends. given the existing number of nearly 48, 000 rural and semi - urban branches, an increase of loans by rupees one crore per branch could imply additional profits of about rs. 480 crore to the banking system. ( ii ) currently each rural branch services only around 1000 loan accounts. if we assume that a bank branch can serve at least 3000 households, it would imply at the minimum tripling of the business at rural branches this might require redeployment and some increase in staff, especially field staff, and would be more than worth the effort considering the increase in business and profitability that it would result in. ( iii ) banks would need to decide the kind of delivery channels required for meeting the banking and remittance needs of the rural population. today the branch is not the only way of delivering banking services. all options such as mobile and satellite offices, rural atms, smart card and mobile phone based banking, use of intermediaries including shgs, including post offices need to be explored for penetrating into the rural markets. several banks have tie - up arrangements with corporates engaged in contract farming. it solutions can take banking to the remotest corner and cut costs apart from providing valuable databases for furthering business strategies. whatever be the mode of penetration, it is clear