opportunity as the objective of financial inclusion is not just about giving access to thrift and credit, it's about empowering individuals to realise their true potential and contribute to a thriving economy. financial inclusion needs to be redefined by developing bespoke products and services that are best suited to different strata of the society depending upon their income level. this shall include innovative solutions that make it easier for people to not only access basic but also to use a variety of financial services. towards this end and to enable easy, adequate, and customized credit, the reserve bank has made provisions for differentiated banking license. these are niche banks which can help plug the gap in meeting specialised needs for banking products and services across a wider and diverse spectrum. another, critical issue in india ’ s credit market has been the consistent gap between the demand and supply of credit to micro small and medium enterprises ( msmes ). the micro, small and medium enterprises ( msme ) sector contributes around 30 % to india ’ s gdp, 45 % to its manufacturing output, and 48 % to exports. this has to be seen as an area of opportunity by the banks and other financial institutions. another emerging area of focus is making finance available for transitioning to a low carbon economy. all of us are now cognisant of the global challenge that climate change poses to our planet and its impact which is reverberating across the world. if we fail to take timely action, the consequences will be irreversible. the indian government has already committed to reduce the total projected carbon emissions from now till 2030 by one billion tonnes, reduce carbon intensity of the economy by more than 45 per cent by 2030, and achieve ‘ net zero ’ emissions by the year 2070. as a central bank, we also have a responsibility to promote sustainable economic growth which includes transition to a low - carbon economy. banks can play an essential role in financing the transition to a low - carbon economy by channelising finance to sustainable and green projects as well as by developing new financial products that incentivise green initiatives. our actions will set the course not only for the future of the planet but also determine the kind of environment which we bequeath our future generations. for a regulator in a developing country, given the high rate of technology adoption, keeping pace with market innovations is always a challenge. regulating such a dynamic financial sector can be very aptly described as “ just when we thought we knew all the answers, someone changed the

. and regulatory change can stimulate new applications of technology that foster greater efficiency and growth. at times, there is a complex interplay between changing technology and regulation. in the payments arena, regulators and rulemakers need to be aware of how technology is changing the industry and, when appropriate, remove artificial barriers to innovation. let me highlight several important examples of recent adjustments to rules and regulations that have changed the way payments are initiated and processed. beginning in the late 1990s, the national automated clearing house association ( nacha ) changed its rules to permit the so - called conversion of checks to electronic fund transfers via the ach system ; subsequently, the board modified its staff commentary to clarify the application of regulation e to these transactions. 4 today, businesses can use the information on eligible checks they receive over the counter and at lockbox locations to create ach debit transactions. partly as a result of the private sector ’ s expanding use of check conversion, the total volume of checks collected by federal reserve banks has in recent years fallen faster than the estimated decline in the number of checks being written. in 2003, congress passed the check clearing for the 21st century act ( check 21 ). 5 broadly speaking, check 21 was designed to foster market - based improvements in the check collection and return system, mainly by authorizing – but not requiring – banks to truncate or stop the flow of original paper checks and to create legally equivalent substitute checks for presentment to the paying bank. 6 in 2004, the board published regulatory changes to implement check 21. the legal and regulatory changes associated with check 21 are encouraging the banking industry to use new technologies to create and process digital images of checks and to print substitute checks only when necessary to meet legal presentment or customer requirements. in a recent report to congress on check 21, the board noted that the adoption of new clearing techniques was slow at first but has accelerated significantly in the past year. 7 for example, between march 2006 and january 2007, the banking industry ’ s use of substitute checks increased three - fold and its use of electronic check images increased five - fold. this pattern of adoption is consistent with early conjecture from the banking industry that the scale and scope of required changes to individual bank technology systems and operations would take time to implement. in addition, check 21 has started to alleviate the check system ’ s dependence on large - scale air transportation to move checks around the country, a vulnerability that was highlighted when planes were grounded following the events of september 11. to address