of financial inclusion the scope of financial inclusion can be expanded in two ways. a ) through state - driven intervention by way of statutory enactments ( for instance the us example, the community reinvestment act and making it a statutory right to have bank account in france ). b ) through voluntary effort by the banking community itself for evolving various strategies to bring within the ambit of the banking sector the large strata of society. when bankers do not give the desired attention to certain areas, the regulators have to step in to remedy the situation. this is the reason why the reserve bank of india is placing a lot of emphasis on financial inclusion. in india the focus of the financial inclusion at present is confined to ensuring a bare minimum access to a savings bank account without frills, to all. internationally, the financial exclusion has been viewed in a much wider perspective. having a current account / savings account on its own, is not regarded as an accurate indicator of financial inclusion. there could be multiple levels of financial inclusion and exclusion. at one extreme, it is possible to identify the ‘ super - included ’, i. e., those customers who are actively and persistently courted by the financial services industry, and who have at their disposal a wide range of financial services and products. at the other extreme, we may have the financially excluded, who are denied access to even the most basic of financial products. in between are those who use the banking services only for deposits and withdrawals of money. but these persons may have only restricted access to the financial system, and may not enjoy the flexibility of access offered to more affluent customers. consequences of financial exclusion consequences of financial exclusion will vary depending on the nature and extent of services denied. it may lead to increased travel requirements, higher incidence of crime, general decline in investment, difficulties in gaining access to credit or getting credit from informal sources at exorbitant rates, and increased unemployment, etc. the small business may suffer due to loss of access to middle class and higher - income consumers, higher cash handling costs, delays in remittances of money. according to certain researches, financial exclusion can lead to social exclusion. international experience in promoting financial inclusion an interesting feature which emerges from the international practice is that the more developed the society is, the greater the thrust on empowerment of the common person and low income groups. it may be worthwhile to have a look at the international experience in tackling the problem of financial exclusion so that we

to indirect market - based instruments in the conduct of monetary policy was made possible because of simultaneous efforts at developing various segments of the financial market, particularly money, foreign exchange and government securities market. the increasing responsibility of the reserve bank of india in undertaking reform in the financial markets has to be seen essentially in the context of improving the effectiveness of the transmission channel of monetary policy. development of financial markets has, therefore, encompassed regulatory and legal changes, building up of institutional infrastructure, constant fine - tuning in market microstructure and massive upgradation of technological infrastructure. an important achievement in this area was the amendment to the securities contracts regulation act, which clarified the regulatory jurisdiction of rbi over the money, government securities and forex segments of the financial market. the money market is critical in facilitating the conduct of monetary policy and in improving the transmission mechanism. this requires the rbi to have greater control over the liquidity in the system, create an efficient mechanism to impart interest rate signals and undertake continuous refinements to money market instruments. the market for repo is being scientifically developed over a period through widening of participants and instruments, and by bringing uniformity in trading and accounting practices with the help of fixed income money market and derivatives association of india ( fimmda ). a clearing corporation has been proposed, so that repo operations could become efficient with adequate safeguards. similarly, rbi has been closely nurturing the treasury bill market. it has increased the range of t - bills over the years, modified the notified amounts and incorporated changes in the auction formats to suit the needs of the market. the efficacy of commercial paper and certificates of deposit has also been improved over the years with measures such as reduction in the minimum period and amount of issue, lock - in period, preferring dematerialised form, etc. the most important reform in the money market relates to the initiation of liquidity adjustment facility ( laf ). with the announcement of the second phase of laf, the rbi has moved gradually from a system of segmented refinance to a more fungible system of liquidity adjustment at market related rates. reform in the call money market has also been announced to make it purely interbank market, over a phased period. in the government securities market, the borrowing programme of the government has been systematised and rationalised with the establishment of cash and debt management group consisting of officials from rbi and the government and could be completed without destabilizing the financial markets.