the central bank for crisis management. going forward, it would be important to clearly define principles for access to emergency liquidity assistance from the central bank. the principles will need to balance the imperatives of ensuing capacity to provide adequate liquidity support during the crisis while ensuring that perverse incentives for lax liquidity management are not built up in the banking system. the principles may also need to address issues relating to collateral standards, given the experiences of recent crises. the spectre of “ too big to fail ” institutions raised its ugly head during the 2007 global financial crisis focusing attention on the lack of the necessary arrangements for orderly resolution of such institutions. a crisis management framework will need to be alive and open to the possibility of failure, if only to prevent the associated moral hazard problems. for the “ nofailure ” perception to be altered, robust arrangements, which allow orderly resolution and mitigate systemic consequences of such failures will need to be put in place, especially for the resolution of cross border financial firms. the financial stability board has recently released the “ key attributes of effective resolution regimes ” that would lay down the essential features and tools that national resolution regimes for financial institutions, including non - bank financial institutions, should have. for the large and complex financial institutions, ex ante resolution plans, or “ living wills ” are one solution being contemplated internationally in this regard. recent initiatives towards introducing contingent capital instruments may also potentially play an important role in banks ’ recovery and resolution plans, going forward. crisis prevention while the subject of this seminar is crisis management, let me emphasize that the most preferable approach to fostering financial stability is crisis prevention. a series of reforms to the regulatory architecture and plethora of reforms are underway globally which seek to reduce the probability of a crisis occurring. the basel iii reforms aim at increasing the resilience of banks through prescription of a higher quality, quantity and consistency and better risk coverage of capital. the set of reforms for systemically important financial institutions are aimed at reducing the probability of failure of these large and complex financial institutions and at putting in place a robust resolution framework so that the institutions can be winded down in an orderly manner, should they fail. regulatory perimeter issues are being addressed by putting in place a regulatory framework for the shadow banking system. another set of reforms are aimed at addressing issues in the otc derivatives markets by ensuring that the transactions in these markets are reported, centrally cleared and, where possible, settled through a central counterparty. compensation structures are

literate would demand information and thereby play an important role in ensuring transparency among the financial institutions. the transparency in the market encourages institutions to compete on the basis of better products and services and at lower cost. that is what the informed customers bring into the market and ultimately it is beneficial because it expands the market and brings more and more new customers. demand side barriers • what are these demand side barriers? the first demand side barrier is more on personal level. a large number of people who have come into the financial system now have low or uncertain incomes. for them, any high fee or a stipulation like bis central bankers ’ speeches maintaining a minimum balance in the account it can become a barrier. this is what i call a personal barrier. • the second is, of course, the low level of financial literacy. if they don ’ t have that level of literacy, then they would not know about the availability, neither can they judge the products ’ suitability nor can they compare various products. when that does not happen for the new entrants to the financial system, it creates a trust deficiency. it does not break that hesitation to use the banking services. that is the second barrier. • the third barrier is low social and technological inclusion. what is social inclusion? i did mention in the early part of my address about the rapid migration of people from rural to urban area. the migratory population coming into the towns or cities find themselves displaced from their roots. they don ’ t have their ecosystem in place, whereby something like obtaining an address proof or a simple introduction becomes a challenge. so, these are the social inclusion challenges. • similarly on technological side, the hesitation to use atms, mobile banking, net banking etc. these are the kind of things which act as a technological barrier. i have seen in the programme schedule there is a session on this also. this should become an important part of the financial literacy drive that we are talking about. • and finally the fourth barrier – the linguistic barrier. india is a diverse country. there are so many dialects, so many languages and until and unless players deal with the consumers in respective area in the local language ; unless the literature, the material is made available in the local language, the efforts towards connecting these consumers would never succeed. 18. effectively, we have so much of supply side infrastructure available and at the same time we do have these demand side barriers. so the challenge before us is how to break the barriers on the demand