shyamala gopinath : launch of currency futures by nse remarks by ms shyamala gopinath, deputy governor of the reserve bank of india, at the launch of currency futures by national stock exchange of india ( nse ), mumbai, 29 august 2008. * * * honourable finance minister, chairman sebi shri bhave, chairman nse, shri mathur, md & ceo nse, shri ravi narain, dmd, nse smt. chitra ramakrishnan, ladies and gentlemen. we are gathered here to mark an event of great significance in the context of indian financial markets. this event is in fulfillment of the announcement made by the hon. finance minister as part of the budget speech in february 2008. it may be recalled that the preparatory work in this regard had commenced with the setting up of an internal group on currency futures in rbi as announced in the annual policy, april 2007. today is the culmination of a process of extensive consultations and deliberations intended to design a framework for introduction of currency futures in conjunction with the existing vibrant otc market. let me say a few words on the impressive growth of forex markets in india in the recent past. as per the bis triennial survey on the global foreign exchange and derivatives market activity ( 2007 ), the foreign exchange market in india has grown into the 16th largest market in the world in terms of total daily turnover which was us $ 34 billion in 2007. the otc derivatives segment of the foreign exchange market has also increased significantly to register a daily average turnover of usd 24 billion, which is 17th largest among all countries. the daily turnover has increased to us $ 48 billion in 2007 - 08. the bid - offer spreads are narrow reflecting the liquidity and efficiency of the market. there is a wide menu of products available in the otc market which serves a distinct economic purpose. the biggest challenge in designing a framework for currency futures in india, i may say, was the contextual setting in which the foreign exchange market operates in india. there was no ready template available internationally that we could draw upon since most of the countries that have active currency futures markets are those which are relatively more convertible on the capital account. the endeavour was to have a framework which genuinely sought to provide an additional avenue for risk management while maintaining the integrity of the existing market microstructure. the report of the internal group was discussed extensively in the meetings of the technical advisory committee on financial markets

people but also as an avenue of providing excellent business opportunities for the financial market payers. generally, we associate the term financial inclusion with our initiatives of bringing poor people in the rural areas into the banking fold ; however, we have to realize that there are still a large number of people in the urban area who are financially excluded. they have the need for availing the various types of banking services, especially the savings and money remittance services. this section of financially excluded people in the urban areas provides a good opportunity for the ucbs to step in and fill this void. this is a challenge and a big opportunity for the ucbs at the same time ; and i reiterate that if ucbs are not able to grab this excellent opportunity, new institutions will come up to fill this void and ucbs will lose a good business opportunity. rbi and financial inclusion rbi has been giving adequate attention and has stepped in whenever it felt that the banking community as a whole has missed out or not given the desired attention to certain areas. this is the reason why the reserve bank is placing a lot of emphasis on financial inclusion. in india, the focus of the financial inclusion at present has been confined to ensuring a bare minimum access to a savings bank account without frills with a limited overdraft facility to all. rbi has framed guidelines with a view to achieving greater financial inclusion, to make available a basic banking “ no frills ” account either with nil or very minimum balances as well as charges that would make such accounts accessible to vast sections of the population. the nature and number of transactions in such accounts would be restricted and made known to customers in advance in a transparent manner. efforts are being made so that all banks give wide publicity to the facility of such no frills account to ensure greater financial inclusion. banks and financial institutions have to take a lead here for achieving our objective of reaching out to people. in order to ensure that persons belonging to low income group both in urban and rural areas do not face difficulty in opening the bank accounts due to the procedural hassles, we have simplified the kyc procedure for opening accounts for people who intend to keep balances not exceeding rupees fifty thousand ( rs. 50, 000 / - ) in all their accounts taken together and the total credit in all the accounts taken together is not expected to exceed rupees one lakh ( rs. 1, 00, 000 / - ) in a year. cooperative banks and