and cash flows of the household without insistence on security or purpose or end - use of credit. the credit facility was to be in the nature of revolving credit entitling the holder to withdraw up to the limit sanctioned. the banks are required to charge appropriate and reasonable interest rate on the facility. in january 2006, banks were permitted to utilise the services of non - governmental organisations ( ngos / shgs ), micro - finance institutions and other civil society organisations as intermediaries in providing financial and banking services through the use of business facilitator and business correspondent ( bc ) models. the bc model allows banks to do ‘ cash in - cash out ’ transactions at the location of the bc and allows branchless banking. the matter of issuing passbooks to the small depositors has been a nagging issue for sometime past. as we all know, the pass books provide the account holders a ready reckoner of the transactions in their accounts and is a convenient reference document – which can not be substituted by periodical bank account statements, particularly by the small account holders. since non - issuance of the pass books to the small customers could indirectly lead to their financial exclusion, the rbi had advised the banks in october 2006 to invariably offer the pass book facility to all its savings bank account holders ( individuals ) and not to levy any charge from the customers therefor. i do hope that the banks, particularly those with greater reliance on technology, have instituted necessary measures to ensure that non - provision of pass books does not become yet another source of financial exclusion. with a view to facilitating the opening of bank accounts by the common man through a simplified kyc procedure, in the mid - term review of the annual policy of the rbi for the year 2006 - 07, it was announced that the " banks could open accounts of low balance / turnover ( where the balance does not exceed rs. 50, 000 / - in all the accounts taken together and the total credit in all the accounts taken together is not expected to exceed rupees two lakh in a year ) only with self certification of address by the customers and his photograph. " however, this policy announcement is yet to be operationalised as the matter is under consideration of the government in the light of the provisions of the rules framed under prevention of money laundering act. promoting credit counselling and financial education of the clientele of the banks is also an area that deserves due attention of the banking community. towards this objective, the banks were also advised

##s and e. carletti ( 2012 ), “ asset commonality, debt maturity and systemic risk ”, journal of financial economics, vol. 104, pp. 519 – 534. bis central bankers ’ speeches common asset exposures. depending on the structure of the network, even small shocks to central hubs in the network can result in serious propagation throughout the system. in most cases, during normal times, financial network structures are typically fairly robust to shocks and thus allow for a better diversification of risk. however, this notwithstanding, shocks to particular elements of the network can trigger major contagion within the system. this is a key feature of the so - called “ robust yet fragile ” complex networks ; also alluded to by doyne farmer this afternoon. 8 from a broader financial stability perspective, it is however not sufficient to be able to monitor systemic risks and their potential spillover effects within the financial system were they to occur. financial stability analysis, and macro - prudential policy actions, is as much about assessing the implications of ruptures in the financial system on the wider economy. from this viewpoint, the development of macro - financial models linking financial instability and the performance of the economy is of the essence. the global financial crisis has revealed important deficiencies of the standard macroeconomic models in capturing financial instabilities. realistic characterisations of such instabilities include bank defaults, financial market illiquidity, extreme events, and related non - linearities. especially, the modelling of bank defaults within a general equilibrium framework is crucial to allow for a proper characterisation of financial instability. however, none of these elements feature in the macroeconomic models regularly used for forecasting and monetary policy analysis and only recently has more emphasis been given to better developing the role of financial sectors in these models. another fundamental link which until recently has been missing in macro - financial models is to allow for heterogeneity, and interlinkages, between the agents within the financial sector. against this background, efforts by economists such as gertler and kiyotaki to incorporate interbank markets within dynamic stochastic general equilibrium ( dsge ) models are much welcome. 9 also worth noting is the model by goodhart, kashyap et al which includes the presence of a shadow banking system holding securitised assets issued by the traditional banking system that are subject to default. 10 a lot of attention, for example illustrated in the analysis by