. there must be a bifurcation between villages with more than 2000 population and those with less than 2000 population. the plan needs to cover in an integrated manner both categories of villages. the names of the bc / branch covering a particular village need to be indicated on the banks website. financial inclusion plan : integrated with banks ’ business plans 10. fourth, financial inclusion plans must be integrated with the normal business plans of the banks. we believe that banking to the poor is a viable business opportunity but costs and benefit exercise needs to be attempted by the banks to make financial inclusion congruent with their business models. banks must view financial inclusion as a huge business opportunity and perfect their delivery models. operational issues : need for intermediate structure 11. fifth, the banks need to examine the operational issues related to the bc model such as cash handling. they need to evaluate whether an intermediate brick and mortar structure is required between the base bank branch and bcs for more effective supervision of the bcs. this structure, which should be manned by banks ’ own skeletal staff can have a safe where bcs can deposit cash, a cbs terminal and passbook printing facility. over a period of time, this can morph into a full fledged satellite branch of the bank urban financial inclusion : not to be lost sight of 12. sixth, financial inclusion is sometimes erroneously treated as synonymous with rural poverty. concerns of urban poverty also need to be factored in and the needs of various groups as rickshaw pullers, construction workers, migrant workers, etc. must be factored in and products and services crafted as per their needs by the banking system to address urban financial inclusion. monitoring : need for a structured approach 13. seventh, we would be closely monitoring the progress made by the banks as per their financial inclusion plans. a structured reporting format has been made available for meaningful compilation and analysis of data. the banks need to do similar structured data compilation exercise at the state / district level which will facilitate monitoring at the district / state / bank level. a structured approach will ensure that this time the outcome of our financial inclusion efforts will be different and will not meet the same fate as previous ones. other issues 14. let me reiterate that financial inclusion is not mere state benefit transfers. loans must be extended and savings and borrowings habits need to be inculcated among the poor. poor do not require cheap credit but prompt credit. it is an anomaly that while they are pressed to pay exorbitant rates of interest

to the money lender, the mainstream financial institutions are still shy of lending to them. in the ultimate analysis, financial inclusion is a driver of economic growth and poverty alleviation. 15. inclusive financial sector development makes two complementary contributions to poverty alleviation : financial sector development is a driver of economic growth which indirectly reduces poverty and inequality ; and appropriate, affordable, financial services for poor people. critical to our efforts at securing sustained economic growth are the expansion of last mile access to finance. thus financial inclusion is no longer a policy choice but is a policy compulsion. in a bank based model, customers have a direct contractual relationship with a bank or similar prudentially regulated and supervised financial institution – a basic bank account, a savings account, a savings cum overdraft account, a transaction account, a loan, or some combination – even though the customer may deal exclusively with the staff of one or more retail agents hired to conduct transactions on the bank ’ s behalf. in the non - bank based model the contractual relationship is with a non - bank service provider such as a mobile network operator or an issuer of stored - value payment instruments. customers exchange cash at a retail agent in return for an electronic record of value. this virtual account is stored on the service provider ’ s server. nevertheless, although there is no contractual relationship directly between a bank and a customer, a bank is always involved, for example as a potentially safe and liquid place for the nonbank provider to hold the float. our model in india as of now is a bank led model and in this way we are able to address consumer protection issues which are of paramount concern given the nature of the vulnerable clientele we are dealing with. here, financial capability building through financial literacy and education also assume great importance. we have mandated the setting up of financial literacy and credit counselling centres which are expected to go a long way in ameliorating the lot of the customer although it should be understood that first we have to provide financial access. 16. finally, let me stress that currently we are marketing the paradigm of financial inclusion through the bank - led model. it is thus for the banks to rise up to the challenge and meet it in full measure. what we mean by no access to finance for the excluded is that no access from the formal financial system ; so a word of necessary caution for banks ; the paradigm of financial inclusion is ultimately one of the continued relevance for the banking sector as other actors are waiting anxiously in