v k sharma : short - term cooperative credit structure and financial inclusion keynote address by mr v k sharma, executive director of the reserve bank of india, at the central zone cooperative conference on “ short - term cooperative credit structure and financial inclusion ”, organized by the national cooperative union of india in collaboration with chhattisgarh state cooperative union ltd., raipur, chhattisgarh state, india, 11 december 2011. * * * the views expressed are those of the author and not of the reserve bank of india. shri charan das mahant, hon ’ ble minister of state for agriculture & food processing, government of india, shri gouri shanker bisen, hon ’ ble minister for co - operation, government of madhya pradesh, shri chandra sekhar sahu, hon ’ ble minister for agriculture, government of chhattisgarh, dr. chandra pal singh yadav, president, national cooperative union of india, distinguished invitees and guests, ladies and gentlemen. i indeed deem it an honour and a privilege to be addressing today this very august and distinguished audience on issues, concerns and challenges that the rural cooperative credit structure faces at its current stage of evolution. as you may perhaps be aware, the united nations has declared the year 2012 as the international year of cooperatives and, to my mind, this is precisely what makes today ’ s central zone cooperative conference, both contextually and topically, very relevant and it will culminate, i am sure, in most desired outcomes going forward! and it will be no exaggeration to say that india has been among the pioneering nations in the matter of genesis, and democratic evolution, of agricultural and rural co - operatives, truly informed, and inspired, by the tenets and principles of cooperation. given the extensive and widespread financial exclusion in the country, both the government of india and the reserve bank, decided to put financial inclusion on the top of their policy and strategy agenda. as part of this veritable watershed policy and strategy initiative, the government and the reserve bank enjoined upon scheduled commercial banks and regional rural banks to roll out, in a timebound manner, board - approved, top - management - owned, business - plan - integrated, mission - mode - driven and government & rbi - monitored, bc - ict - cbs ( business correspondent – information & communication technology – core banking solution ) leveraged financial inclusion plans for door - step delivery of a bouquet of basic financial services in the

a prolonged period. of the major countries, the united states was the first to raise rates, with the fed beginning to tighten in mid 2004. the european central bank has only just started the process in recent months and the bank of japan is not expected to start lifting rates for some time yet. thus, even though the fed has now restored the funds rate to a relatively normal level of 4. 5 per cent, world policy interest rates on average remain well below normal. another unusual aspect of current global interest rates is that long - term rates, which are set by the demand for and supply of funds in capital markets, have remained quite low in the face of rising official interest rates. although various explanations have been put forward for this unusual behaviour, the most likely cause is an ex ante excess supply of savings relative to investment around the world, with asia accounting for a large part of the excess global savings. for equity markets, the combination of low interest rates, strong economic growth and low inflation has proved very beneficial, with global share markets rising solidly in each of the past three years. this has been underpinned by strong growth in profits so that, notwithstanding the rise in share prices, p / e ratios have been declining on average. it is worth noting that the australian share market has behaved quite differently from the global market over the past decade. it was affected much less than most markets by the tech bubble and the subsequent collapse, and in recent years has been rising faster than average. along with the canadian share market, it is the only major market that is currently above earlier peak levels, whereas in europe and the united states share markets are still about 20 per cent below their early 2000 peaks. the australian dollar has remained in a relatively steady range over the past couple of years, at levels that are a little above average against the us dollar and about 10 per cent above average in tradeweighted terms. some people have found this steadiness puzzling against the background of very strong rises in commodity prices and the terms of trade, as such episodes in the past have been associated with strong rises in the currency. a key to understanding the different behaviour on this occasion is the change in the interest differential with the united states. this has narrowed appreciably over the past 18 months because the fed has tightened much more than we have. domestic credit and debt in recent years we have given a lot of attention to the growth of household debt and its possible effects on the macro economy.