in the group to take their future into their own hands. meanwhile, she brought banking services to them. and she provided evening literacy classes. the 177 women of lakshmi ’ s self - help group have all borrowed and repaid their loans. 3. aruna and lakshmi are just two of the millions of women across the country who have demonstrated what is possible if only rural women can have access to basic financial services. this is what financial inclusion is all about – giving people an opportunity to build better lives for themselves and their children. that impulse, if given a chance, can contribute to sustained improvements in the quality of life at the community level and foster growth and poverty reduction at the national level. 4. but there remain tremendous barriers to unleashing this “ fortune at the bottom of the pyramid. ” chief among them : financial exclusion. this is a confluence of multiple barriers : lack of access, lack of physical and social infrastructure, lack of understanding and knowledge, lack of technology ; lack of support, lack of confidence, among others. overcoming these barriers is, in a nutshell, the challenge of financial inclusion. why is financial inclusion important? 5. why is financial inclusion important? it is important simply because it is a necessary condition for sustaining equitable growth. there are few, if any, instances of an economy transiting from an agrarian system to a post - industrial modern society without broad - based financial inclusion. as people having comfortable access to financial services, we all know from personal experience that economic opportunity is strongly intertwined with financial access. such access is especially powerful for the poor as it provides them opportunities to build savings, make investments and avail credit. importantly, access to financial services also helps the poor insure themselves against income shocks and equips them to meet emergencies such as illness, death in the family or loss of employment. needless to add, financial inclusion protects the poor from the clutches of the usurious money lenders. 6. there is another benefit of financial inclusion which we have yet to fully appreciate let alone exploit. financial inclusion will make it possible for governments to make payment such as social security transfers, national rural employment guarantee programme ( nrega ) wages into the bank accounts of beneficiaries through the “ electric benefit transfer ” ( ebt ) method. this will minimize transaction costs including leakages. in parts of the country where such ebt has already taken off, the results are impressive and the experience of both payers and recipients extremely satisfying

independent review by the internal audit. management should respect the independence of the compliance function and not interfere with their fulfilment. nevertheless, even at the cost of repetition, i would like to stress that compliance is a shared responsibility of each and every staff of the bank. importance of corporate governance while feedback mechanisms are important in a bank to permeate a strong compliance culture, enabling environment in a bank that fosters such culture embedded with strong internal control has to emanate from the directions of the board. aspects with benefits to the bank not apparent has to be enforced through a top down approach. corporate governance determines the allocation of authority and responsibilities by which the business and affairs of a bank are carried out by its board and senior management, including how they : align corporate culture, corporate activities and behaviour with the expectation that the bank will operate in a safe and sound manner, with integrity and in compliance with applicable laws and regulations. in this context, it may be noted that board should adopt policies in accordance to each bank ’ s size, complexity, risk appetites, business model and philosophy. board approved policies should factor in entity specific vagaries. also, mere adoption of policies does not solve anything. an effective implementation of board approved policies is essential to percolate down the philosophy embedded in policy throughout the firm. a strong compliance culture has a significant role to play in this context. conclusion lot of improvement is needed in compliance culture across banks. as a supervisor of banks, the reserve bank has keen interest in sound corporate governance and compliance culture, as it is an essential element in the safe and sound functioning of a bank and if not followed effectively may adversely affect the bank ’ s risk profile. well governed banks contribute to an efficient and cost - effective supervisory process, as there is less need for supervisory intervention. such sound culture would help in building organisations that are strong, resilient, disciplined and enjoy the benefits of sustained growth and customer confidence. it will also pre - empt several supervisory actions, and attendant reputational risk, that would follow in case transgressions are detected. role of compliance has been gaining wider attention across the globe and it has been acknowledged by the central banks and bankers alike that compliance warrants considerable attention. regulators, supervisors and international standard setters have become increasingly cognizant of the fact that merely enacting rules and regulations is a futile exercise unless these are complied with, both in letter and spirit, by the regulated entities.