and newer regulations with greater effectiveness. at the same time, those who engage in finance must have an obligation towards promoting financial inclusion, without which bis central bankers ’ speeches inclusive growth cannot be achieved. banking should have a human face for it is the households who provide the base for all banking activities. they are the only ones with financial surpluses which can be intermediated to corporate and public sectors that run financial deficits. it has been my endeavour to push policies on bank lending with a view to encourage credit flows to the vulnerable section of the population that would otherwise get financially excluded. over the years, this has been the ethos of the reserve bank. the branch licensing policy and the directed lending route have been the two pillars on which the efforts for financial inclusion have rested for a long time. the bank licensing policy, mandating a certain ratio of rural bank branches for each license for urban branch, has often been criticised by banks as coming in the way of their business interests. however, there is strong research evidence to suggest that this social banking experiment in india has been successful in improving the credit flows to the rural population and even in lowering poverty as a result. the priority sector lending ( psl ) stipulation has also improved the flow of credit to certain productive sectors of the economy that would otherwise have been crowded out of the bank credit market due to information asymmetries. there are reasons to believe that with proper planning and use of technology - enabled efficient delivery channels, banks can pursue financial inclusion in a profitable way. our approach should not be seen as being interventionist. in practice, reserve bank has deftly balanced objectives of equity and efficiency so that financial inclusion is furthered, but banks ’ financial health is not impaired. in more recent period with which i have been associated, we have redoubled our efforts at financial inclusion. for instance, the prescription for psl in respect of foreign banks has been raised from 32 per cent to 40 per cent in case of those banks which have 20 or more branches. we have also imparted a more human touch to basic banking for those who did not have bank accounts. conclusion let me end by talking about something we need to learn from the east asian tigers in our quest to become one. growth acceleration in these tigers were supported by liberalization, export - led growth, high investment in education, large share of educated workforce, high public and private savings rate and macroeconomic discipline and governance. we are pursuing some of these policies

a due recognition and respect. if we do so, more women and men would join the workforce. unemployment would be reduced and indian industry would become more competitive globally. 3. revive infrastructure investments and harness natural resources better much has been said about india ’ s infrastructure deficit and rightly so. india does not have sufficient roads, nor sufficient power. when i was growing up, i was taught that india is a land of poor, but is rich in resources. today we have made a giant leap in lowering poverty and still remain abundant in natural resources. yet, we have not learnt to optimally utilise them. take for example coal, which accounts for india ’ s 55 per cent of energy needs. we have hard coal reserves of around 246 billion tonnes, of which 92 billion tonnes are proven. yet, we are able to produce only 530 million tonnes of coal, leaving supply shortages of over 150 million tonnes. coal shortages are constraining our power generation and though about 55 gw of new capacity was created during the 11th five year plan ( fyp ), a large part of it remains unutilised due to coal shortages. private sector has failed to develop most of the new coal blocks that were allotted to them. we ended up with inadequate planning and poor execution in this area. we are now planning to create even more thermal power capacity during the 12th fyp, but remain unsure of coal supplies. at the same time, banks have heavily extended themselves into lending to power sector both on generation and distribution side. on the distribution side, the state distribution companies ( discoms ) are sitting on huge losses and bank debt that is threatening to go bad. the end result is a loss of business confidence that has brought the investment boom to a premature halt. what is most important in this context is to revive the confidence for investing and lending to the infrastructure sector. the government, in recent period, has taken several steps to facilitate this. the broad contours of the new fuel supply agreements ( fsas ) have been worked out, though some thorny issues such as price pooling of imported and domestic coal are still to be resolved. these pending issues must be solved quickly. similarly, a debt restructuring package for the discoms has been worked out. the private sector must seize the initiative and rekindle the schumpeterian spirit at this juncture. banks also need to perform their core banking business while balancing risk assessment with the functional need to support growth. we also