to microfinance ( mf ) providers to top and middle tier microfinance banks ( mfbs ) and microfinance institutions ( mfis ) for key investments in hr, it, product development, risk management systems, business plans and branchless banking development. the microfinance credit guarantee facility to link microfinance with financial markets for mobilization of wholesale commercial funding through partial guarantees. similarly, the financial innovation challenge fund ( ficf ) for grants to innovative projects and testing new markets to lower cost of delivery, enable systems and procedures to be more efficient and provide new ways of meeting the larger demand for financial services. and the improving access to financial services fund which is supporting today ’ s program. these are mostly supply side interventions aiming to increase financial services by removing bottlenecks and have raised financial inclusion to a certain extent. however, what has been missing is a demand side solution – a program to impart financial education and awareness to consumers. this recognises that the very low level of financial awareness and confidence of financially excluded groups remains a strong barrier to their access and use of financial services. in addition, there are risks involved in creating new opportunities for consumers if the consumers are not proficient at making financial decisions. therefore, going forward, sbp considers financial literacy as an integral part of the financial inclusion strategy. financial literacy has assumed greater importance in recent years for both developed and developing countries, therefore, best practices in this area are still evolving. however, synthesizing from the oecd ’ s high level principles for financial education, some best practices are : first, the financial education program must involve key players from the beginning. this may take a lot of time and effort due to slow decision making process but will ensure success of the program in the long - run. in particular, the consumers must be consulted to understand bis central bankers ’ speeches their preferences and identify appropriate curriculum and dissemination channels and tools. therefore, financial education surveys must be conducted to appropriately identify the needs and to set a baseline for program monitoring. this will also help identify teachable moments for low income groups that may typically occur around the receipt of money, the need for credit etc. second, it is better to implement and earn quick wins to generate positive energy such as starting from a pilot launch initially before going national to gain the buy - in of all the stakeholders. third, the program design should be flexible enough to enable diverse stakeholders to join - in and create synergies. this

the margin provisions in a way that takes appropriate account of the relatively low systemic risk posed by most end users. for example, we are considering if it would be appropriate to allow a banking organization that is a dealer or major participant to establish a threshold with respect to an end - user counterparty, based on a credit exposure limit that is approved and monitored as part of the credit approval process, below which the end user would not have to post margin. the board appreciates that posting margin would impose costs on end users, possibly inhibiting their ability to manage their risks. the board also believes that the margin regime should be applied only to contracts entered into after the new requirement becomes effective. a much - discussed part of the act is the requirement that banks push portions of their swap activity into affiliates or face restrictions on their access to the discount window or deposit insurance. under the push - out provisions, banking organizations with deposit insurance or access to the federal reserve ’ s discount window will have to reorganize some of their derivatives activity, pushing certain types of swaps out of subsidiary banks and into separate legal entities that will require separate capitalization and separate documentation of trades with existing customers. the act permits domestic banks to continue to engage in derivatives activities that have been a traditional focus of banks, including hedging activities and dealing in interest rate swaps, cleared credit default swaps, and other swaps that reference assets that banks are eligible to hold. however, because of the specific language contained in the act, this exemption for traditional bank derivatives activities does not apply to foreign banking firms that have access to the federal reserve ’ s discount window through their u. s. branches. a possibly unintended effect of the act ’ s push - out provision may be to require some foreign firms to reorganize their existing u. s. derivatives activities to a greater extent than u. s. firms. conclusion as the implementation process for the act continues, the challenge facing the board is to enhance supervision, oversight, and prudential standards of major derivatives market participants in a manner that promotes more - effective risk management and reduces systemic risk, while retaining the significant benefits of derivatives to the businesses and investors who use them to manage financial market risks. the board is working diligently to achieve these goals. bis central bankers ’ speeches