duvvuri subbarao : challenges to the accounting profession – some reflections inaugural address by dr duvvuri subbarao, governor of the reserve bank of india, at the 26th regional conference of the western india regional council of the institute of chartered accounts of india ( icai ), mumbai, 16 december 2011. * * * 1. thank you for inviting me to speak at this conference of the western india regional council of the institute of chartered accountants of india ( icai ). 2. when i got invited to speak at this conference, at first i was a bit surprised. i wondered why you might be wasting valuable conference time listening to the reserve bank when there is not much in common between the reserve bank and the accounting profession, except possibly the fact that we both lose sleep when numbers go wrong. i then spoke to my staff and realized how wrong i was. we share considerable professional space and have several mutual concerns. i will address some of those shared concerns. 3. before doing so though, i must acknowledge another link between the reserve bank and the accounting profession through shri y. h. malegam, who has been a director on the central board of the reserve bank almost continuously since 1994 except for a brief interlude of a few days. shri malegam is, by wide acknowledgement, one of the foremost chartered accountants in india who has set very exacting standards of professional competence, and more importantly, of professional conduct. the reserve bank has benefited enormously from his vast knowledge of accounting, his understanding of the financial sector and his judgement of the larger public interest. as a profession, you can all be proud of colleagues like shri malegam who enhance public respect for the accounting profession. the accounting profession 4. the development of the accounting profession owes its origin to the emergence of the joint stock company and the consequent separation of ownership from management. this arrangement triggered the need for an independent and informed opinion on the accounting of the owners ’ funds entrusted to the management for their stewardship. the “ raison d ’ etre ” of the profession is consequently based on the confidence which the profession enjoys with the investing public, and its continued relevance is essentially tied up with retaining this confidence. while initially the profession provided this confidence only to the shareholders of joint stock companies, today it provides this assurance to a wider base of stakeholders including the government, the banking system, regulators and society itself. 5. at the reserve bank, we depend on the accounting profession for at

existence of a national identity system in the country. 8. a few words about indian approach to fi. we have always been alive to the need for extending the reach of the financial sector to the under - privileged sections of the society. financial inclusion for us aims not merely at remittances but also aims at savings product, a loan / credit product, remittance product as also insurance product. thus, in india we believe that, financial inclusion has the potential to bring in the unbanked masses into the formal banking system, could lead to increased savings, provide timely credit to the unbanked masses and all these positive externalities would lead to economic growth. the efforts to channelize the government benefits and subsidies through direct benefit transfers programs to beneficiaries ’ bank accounts directly would not only be helpful in plugging the leaks in distribution but also help in inculcating banking habits. 9. how has india approached fi? we have adopted a structured, planned and an integrated approach towards fi by focusing on both the demand and supply side constraints. we have permitted non - bank entities to partner with banks for their fi initiatives. the technological advancement has made it possible for us to think of novel and innovative ways to approach the objective of financial inclusion. for example, handheld devices, used by bank agents to draw people living in remote areas into the banking fold. mobile technologies are trying to reach out to the populace starved of banking services as well. financial institutions are also joining forces with network operators in providing access to mobile based payment services even to those who do not have bank accounts. 10. let me give you some statistics on our financial inclusion initiatives : 4 bcg - swift “ global payments 2013 – getting business models execution right ”, september 2013 ; and bill & milinda gates foundation “ fighting poverty profitably – transforming the economics of payments to build sustainable, inclusive financial systems ”, september 2013. cgap “ financial access 2012 ”, july 2013. financial inclusion in india – journey so far and way forward ” – speech by dr. k. c. chakrabarty, deputy governor of the reserve bank of india, at the finance inclusion conclave, organised by cnbc tv 18, new delhi, 6 september 2013. bis central bankers ’ speeches • nearly 268, 000 banking outlets have been set up in villages as on march 13 as against 67, 694 banking outlets in villages in march 2010 • about 7400 rural branches opened during this period • nearly 109 million