will suggest, the unmet demand for some kinds of services may be quite large. chart 13 makes the point that a very high proportion of household financial assets are held in cash, which suggest that the ability of many households to access the financial system is low. this is, understandably, even higher in rural areas than in the urban ones. bank deposits are clearly providing an alternative to cash, which is a positive development, but the room for improvement is clearly visible in the picture. the reserve bank has been emphasising on expanding the access to the banking system. the broad objective is to ensure access to all households in villages with a population over 2000 ( as per the 2001 census ) by 2012. the extensive use of technology facilitates this by allowing banks to operate virtual branches in the form of an it - enabled business correspondent ( bc ). this model shows some promise as it rolls out across the country, and also some limitations. it is reasonably clear that the bc model is not infinitely scalable. banks have to innovate in terms of their own organizational structures and support systems to increase the viability and sustainability of the model. but, even with all these concerns, it is a good beginning and the generic model, with appropriate adaptations to local conditions, is the most likely way to achieve at least minimal access to the financial system through a basic or no - frills bank account. this is visualized as the beginning of the process ; once the customer is in the system, it can begin to address his or her other needs by adapting existing products or designing new ones. bis central bankers ’ speeches what other products may interest this new pool of financial service customers? one way to gauge this is to identify the reasons for people to use financial services. chart 14, reporting results from a recent survey of households, provides some important insights on this. ceremonies or social obligations, old - age security, children ’ s education and meeting emergency needs are four of the most important motivations for accessing financial services. clearly, there is a role for insurance, pension and other long - term savings instruments in advancing the cause of financial inclusion. it is in these segments that penetration is extremely low. chart 15 provides a cross - country comparison of insurance services. it speaks for itself. what is needed here is to develop last - mile delivery mechanisms that can take these products from the large providers in the formal sector to this vast pool of new customers. though volumes are potentially large, individual transactions will be small

and geographically scattered, which can play havoc with costs. organizational structures, whether within the existing providers or independent, have to be developed to accommodate these specific market conditions. from a regulatory perspective, the massive expansion of services brings with it risks and these have to be identified and provided for. i will now turn to the issue of the corporate bond market. to provide a backdrop, chart 16 shows the estimated financial requirements for infrastructure over the 12th plan period, 2012 – 17. over the next five years, over rs. 40 lakh crores or $ 1 trillion are desired to be invested. as i indicated earlier, infrastructure supply is a serious bottleneck and large, efficiently implemented and well managed projects across sectors are imperative. even as these are getting under way, there is an obvious lack of financial channels for them to mobilize resources. so far, the responsibility for financing new investments has fallen predominantly on banks. for reasons relating to asset - liability management and sector exposure limits, the capacity of banks to continue to finance this sector is limited. therefore, alternative channels have to be quickly put into place. the corporate bond market is perhaps the most important of these. for several years, one committee after another has been making recommendations for actions to develop this market. these cut across regulatory domains and this is perhaps one reason why, despite the several steps taken, a critical threshold that would make the market viable was not reached. however, in recent months this is on high priority with both the regulators and the government addressing the remaining binding constraints. the 2011 – 12 union budget took a crucial step in exempting bonds issued by infrastructure development funds from withholding tax. it would be reasonable to extend this facility to bonds issued directly by infrastructure companies. another issue that has been flagged, inter - state differentials in stamp duties, is being addressed by attempting a harmonization of rates across states. to make a large number of bonds attractive to a potentially large domestic investor base in the form of insurance and pension funds, credit enhancement mechanisms which will allow bonds to meet minimum rating requirements for a price are being explored. the more efficiently and reliably this service is delivered, the larger will be the potential pool of investment for these huge institutions. of course, aspirations notwithstanding, the question is whether bond markets can realistically emerge as an alternative channel of financing, for infrastructure certainly, but also for investment in other sectors. chart 17 provides a cross - country comparison. it would appear that even in the context of emerging