a smaller segment on a non - basel framework. even after commercial banks begin implementing basel ii framework in march 2007, we may witness basel i and non - basel ii entities operating simultaneously. this would not only ensure greater outreach of banking business, but also, in the present scenario of high growth, enable them to usefully lend to the disadvantageous sections and successfully pierce the informal credit segment. the eighth issue of relevance is that of financial inclusion. while resource limitations experienced by low - income households will continue to constrain their access and use of financial products, the challenge remains for developing appropriate policies, procedures and products that can overcome this difficulty within the bounds of resource constraints. apart from greater latitude in the range of identity documents that are acceptable to open an account, there is also a need for independent information and advisory service. this needs to be supplemented by nurturing appropriate publicprivate partnerships. some development to this effect is already evidenced in the significant growth and development of micro - finance activities. self - help groups formed by non - government organisations and financed by banks represents an important constituent of this development process in india. as part of its ongoing efforts to encourage greater financial inclusion, the annual policy statement released in april 2006, gives particular attention to issues relating to farmers. a beginning has already been made to ensure greater outreach of banking facilities in rural areas through appointment of reputed non - governmental organisations ( ngos ) / post offices, etc., as banking facilitators and banking correspondents. a working group has also been proposed to ensure greater outreach of banking facilities in rural areas and to ensure availability of bank finance at reasonable rates. a working group has also been proposed to suggest measures for assisting distressed farmers, including provision of financial counselling services and introduction of a specific credit guarantee scheme under the deposit insurance and credit guarantee corporation ( dicgc ) act. the convenors of the state level bankers committee in all states / union territories have been advised to identify at least one district in their area for achieving 100 per cent financial inclusion by providing a'no - frills'account and a general purpose credit card ( gcc ). a technical group has also been proposed to renew the existing legislative framework governing money lending and its enforcement machinery so as to provide for greater credit penetration by the financial sector in the rural areas at reasonable rates of interest. the final area that has gained prominence in the recent past relates to customer service. the focus of attention is on basic banking services provided to the common

securities, a screen based anonymous order matching system has been operationalised. ninth, the banking system has also witnessed greater levels of transparency and standards of disclosure with greater volume of information being disclosed as notes on accounts in their balance sheets. salient among these include major profitability and financial ratios, details of capital structures, as well as movements in non - performing loans, movements in provisions, advances to sensitive sectors, to mention a few. the range of disclosures has gradually been expanded over the years to promote market discipline. tenth, corporate governance in banks has improved substantially over the years. a consultative group was constituted to explore the issue in all its facets in accordance with best extant practices. based on its recommendations, in june 2002, banks were advised to adopt and implement appropriate governance practices. as part of its efforts to promote sound corporate governance, the rbi has been focusing on ensuring'fit and proper'owners and directors of the bank and laying stress on diversified ownership. banks have been advised to ensure that a nomination committee screens the nominated and elected directors to satisfy the'fit and proper'criteria. iii. features of reforms the unique features of the progress in financial sector reforms may be of some interest to this audience. first, financial sector reforms were undertaken early in the reform cycle. second, the reforms process was not driven by any banking crisis, nor was it the outcome of any external support package. third, the design of the reforms was crafted through domestic expertise, taking on board the international experiences in this respect. fourth, the reforms were carefully sequenced in respect to instruments and objectives. thus, prudential norms and supervisory strengthening were introduced early in the reform cycle, followed by interest rate deregulation and gradually lowering of statutory preemptions. the more complex aspects of legal and accounting measures were ushered in subsequently when the basic tenets of the reforms were already in place. a unique feature of the reform of public sector banks, which dominated the indian banking sector, was the process of financial restructuring. banks were recapitalised by the government to meet prudential norms through recapitalisation bonds. the mechanism of hiving off bad loans to a separate government asset management company was not considered appropriate in view of the moral hazard. the subsequent divestment of equity and offer to private shareholders was undertaken through a public offer and not by sale to strategic investors. consequently, all the public sector banks, which issued shares to private shareholders, have been listed on the exchanges and