to come out of poverty. such an initiative is expected to be a win - win situation for both banks as also the large section of poor people residing in the rural areas. bis central bankers ’ speeches combination of branch and bc structure we are advocating a combination of brick and mortar structure with click and mouse technology for extending financial inclusion, especially in geographically dispersed areas. banks have to make effective use of technology to provide banking services in remote areas. in addition to creating a large network of small branches in rural areas, the reserve bank has permitted banks to utilise the services of intermediaries in providing banking services through the use of business correspondents. the bc model allows banks to do “ cash in – cash out ” transactions at a location much closer to the rural population, thus addressing the last mile problem. leveraging on technology penetrating banking services through the traditional brick and mortar model was expensive for banks. we realized that the task of financial inclusion was gigantic and would not be possible without actively leveraging on technology. we have therefore encouraged banks to leverage on technology to attain greater reach and penetration for minimizing the cost of providing financial services in far flung areas of the country. with adoption of technology it has been possible for banks to deliver banking products and services to the doorsteps of villages. engaging business correspondents : the reserve bank has permitted banks to engage business facilitators ( bfs ) and business correspondents ( bcs ) as intermediaries for providing financial and banking services. the bc model allows banks to provide door step delivery of services especially to do “ cash in – cash out ” transactions, thus addressing the “ last mile ” problem. the list of eligible individuals / entities who can be engaged as bcs are being widened from time to time and we have adopted a test and learn approach to this process. now, even for profit organisations excluding nbfcs and telcos have been permitted to operate as bcs of banks. relaxation of kyc norms : the strict kyc norms inhibited linkage of common people with the banking system. know your customer ( kyc ) requirements for opening bank accounts have been relaxed for small accounts. further, in order to leverage on the initiative of uidai, we have allowed “ aadhaar ” as one of the eligible document for meeting kyc requirements and very recently have also allowed banks to provide e - kyc services provided through the aadhaar platform. simplified branch authorisation : to address the issue of uneven spread of

digital footprint, these banks face significant operational risks from growing cyber threats, digital frauds, and possible data breaches. the cyber security landscape is evolving rapidly, and sfbs must stay ahead of emerging threats to protect their customers'data and maintain operational resilience. the sfbs should adopt robust business continuity plans and effective it outsourcing strategies. there is also a need to ensure rigorous change management processes, comprehensive data protection measures, vigilant transaction monitoring, stringent access controls and network security protocols. these measures will help sfbs to significantly enhance their it resilience against possible disruptions. operational risk fourthly, while i have covered cybersecurity threats, i would also like boards of sfbs to be mindful of the larger issue of operational risks. during periods of rapid growth, the focus on increasing market share, launching new products, and acquiring customers can lead to a neglect of essential risk management practices. for example, hastily onboarding new customers without thorough kyc due diligence or rushing the deployment of technology solutions without adequate testing can increase the likelihood of frauds, errors and service disruptions. growth is important for the success of small finance banks. however, it must not come by overlooking operational controls. another significant area of concern for operational risk is the high attrition rate among staff in small finance banks. while the branch network and employee headcounts are expanding, the sector faces a very high attrition rate of nearly 40 per cent, particularly among frontline staff and junior management. such elevated turnover, though mostly at the entry and junior management levels, poses substantial operational risks, as it can lead to a loss of institutional knowledge, disruption in service delivery, and increased 4 / 5 bis - central bankers'speeches training costs for new hires. to mitigate these risks, board - level efforts are essential to focus on employee retention strategies at all levels. further, the absence of succession planning for critical managerial positions is a common issue across sfbs, which requires immediate attention from boards to ensure a smooth transition of leadership and maintain operational effectiveness. conclusion in conclusion, sfbs with their outreach to rural and semi - urban areas, are intended to be one of the key enablers in credit offerings to individuals, weaker sections, entrepreneurs, shgs / jlgs and msmes. they have a large role to play in achieving our aspirational goal of becoming a developed nation by 2047. as rbi celebrates 90 years of its foundation