no. that ’ s why bill gates said what he said – “ banking is necessary, but banks are not ”. 20. how this happened? admittedly, it is the technology and the customer expectations which chunked away or which enabled chunking away the different elements of banking. will banks really cease to exist? 21. that ’ s a moot point. at least, as the pwc research report says “ while we are not looking at the end of banking, we are surely looking at the end of banking and banks as we currently know them ”. 22. the chunking away of banking from the banks have given enormous business and growth for these non - banks. with their specialization and focussed service rendering, they are able to offer that chosen service at greatest efficiency, speed and at very affordable cost to the consumers. this has stumbled the growth of banks today and has every potential to lead to de - growth and ultimately the decimation of banks in future. 23. as we know, unconventional policies are rampant in the world. first it was low interest ; then it was near zero or zero interest. people thought that zero is the lower bound and one cannot breach it. now the lower bound has been breached and negative interest has come on the scene. jurisdiction after jurisdiction is ushering in negative interest rate regime. is there any lower bound for negative interest? can banks survive if this trend persists? 24. another set of questions are about the justification for banks to exist. why the society should accord the privilege of banking to banks i. e. why should there be a licensing for undertaking banking activity? let us recall that the west no longer officially designate anybody as a bank ; they have only a depository institution or a credit institution. our fslrc recommended indian financial code also reflects similar thinking. the other day, shri mohandas pai asked me, given the way the non - banks do banking, what is the justification for the banks to impose a cost in the form of the net interest margin of 3 % on the society. in what way rendering banking services under one umbrella is relevant any longer? 25. yet another challenge for the banks ’ existence is the reaction by the society to the financial crisis – the consumer distrust in banks. remember the movement against wall street? the dodd - frank act? the liikanen and vickers reports? the ring fencing of wholesale and retail banking? faced with the challenge of dramatically decreased consumer trust in the post - crisis

? the priority sector concept? the much touted, the much despised, the much maligned, yet rising like the phoenix? may be yes. but i would think that this time around it is with a much larger perspective. in financial inclusion, green financing, aml / cft and even in anti - tax avoidance efforts, banks can play a much larger socially relevant role than any of the chunked away entities. 32. one big area, you vacated and / or let others to occupy by your lackluster attitude is there for your rightful reclaim, if only you make concerted and conscious effort. that is sme financing. small and medium sized enterprises ( smes ) are a major, yet often overlooked sector by formal financial institutions. the smes reportedly account for more than half of the world ’ s gross domestic product ( gdp ) and employ almost two - thirds of the global work force. however, they are the neglected lot world over. as reported by the international financial corporation ( ifc ), a “ funding gap ” of more than $ 2 trillion exists for small businesses in emerging markets alone. i am not going into the reasons for this state of affair. 33. in recent years, the fintech companies and the market place lending have entered into this vacuum and have become immensely and instantly successful and have become a powerful trend. this trend has the potential to become a game changer for small businesses. because fintech solutions are efficient and effective, the fintech ’ s disruptive power is good display. if only the banks can change their current reluctant attitude towards sme financing, they can be a good antidote for these risks and therefore will display their socially relevant role, which in turn can justify their existence for the future. 34. i can only conclude with the idea that if you make yourself socially relevant, not just relevant in economic sense alone, you can have hopes to exist. 35. thank you for your patient attention. bis central bankers ’ speeches