as to place the global recovery on a sustainable path. in spite of large cross currency movements, misalignments continue to persist in the face of the continued global imbalances. in this context, further easing of monetary policy and stronger structural reforms in the euro area have assumed critical importance. despite the limits set by the growth and stability pact on the permissible extent of fiscal expansion, cyclical expansion may be fully allowed, at least, to neutralise the impact of shortfall in revenue realisation in the face of an economic slowdown. if the sources of global growth are not diversified across regions and if countries continue to rely on the us demand to increase their exports and thereby grow faster, the case for us depreciation would become stronger. rebalancing of growth dependence, therefore, would be critical to contain volatility in key exchange rates. several emerging market economies have been contending with the challenge arising from current account surpluses and pressures on the exchange rate to appreciate. large reserve accumulation by some asian emerging market economies, in a way, reflects their lack of confidence in the international financial architecture. the improved reserve position of emerging market economies will surely provide “ self insurance ”, giving the necessary flexibility for exchange rate management. as the duration of the global slowdown becomes more prolonged, fiscal and public debt problem of many countries could intensify further. fiscal adjustment, though necessary, would have to be weighed carefully and is best calibrated with the pace of global recovery. against the backdrop of several adverse developments including severe drought, uncertain global environment and considerable hardening of oil prices, the indian economy performed reasonably well during 2002 - 03. the growth rate of the indian economy at 4. 3 per cent, though lower than expected, was one of the highest in the world. this indicates the growing resilience acquired by the indian economy over the years. with a good monsoon so far this year, a strong recovery in agricultural output is expected. the output for the industrial sector is expected to be reinforced by the renewal of agricultural activity, the abiding strength of export growth and the improved environment for new investments as indicated by a surge in the production of capital goods and non - oil imports. overall, the economy is expected to perform much better in the current year. the growth process would be facilitated by benign inflationary conditions, adequate liquidity coupled with soft interest rates and strong external sector. as a result of various structural reforms, the indian financial system is increasingly

three while being cognizant of their strengths, do not lose sight of their weakness and find ways to integrate their offerings without losing their individuality. 6. as far as banks are concerned, the real challenge would be to reorient their business models to exploit the synergies provided by this model while addressing the key concerns. leveraging on new technology extend the existing risk management practices to various delivery channels acquire all these transactions over the existing settlement networks pitroda, sam and desai, mehul : “ the march of mobile money ”. aggregate various services as part of their existing cross - selling and co - branding initiatives fraud prevention and security standards ; safeguards against money laundering, kyc issues ability to leverage their existing reporting, auditing, and campaign management at back end mobile phones for financial services – across the globe 7. world over there has been increased use of mobile phones for extending financial services to the excluded populations. two models are mainly evident ( i ) bank led model and ( ii ) non - bank led model. 8. the bank led model involves extending all banking facilities including money transfer facility to bank customers through the mobile channel. this pure bank led model essentially incorporates the whole gamut of financial services like acceptance of deposits, extending loans and also providing money transfer facility. the agents are employed by the banks and are therefore directly responsible for their activities. 9. the non - bank led model which are mainly provided by msps. a virtual electronic prepaid wallet on the mobile phone is provided to the customers. customers can use the amount in the virtual account for remittance / payments for goods and services ( m - pesa, kenya ). the number of such models across the globe is very few. in this model the focus is on providing remittance facility. these models provide a virtual prepaid account held with the msp, which can be used by the customer for person - to - person remittance and payments. 10. in india, it has been decided to adopt the bank - led model. mobile payments in india 11. the significance of this channel for the development of payment instruments and as payment channel has been recognized by the reserve bank. accordingly the reserve bank of india issued the guidelines for mobile banking transactions in october 2008. 12. the guidelines permit banks to provide mobile banking transactions and mandates that all transactions have to originate from one bank account and terminate in another bank account. the guidelines also permit banks to extend this facility through their business