state governments to facilitate the design and implementation of pro - poor and inclusive livelihood promotion strategies with focus on excluded groups such as women, schedule castes ( scs ), scheduled tribes ( sts ), minorities, below - poverty line and migrant households and involuntarily displaced people. it is indeed an opportune time for ficciundp to release the paper on “ a study on the progress of financial inclusion in india ” which aims to analyze the role played by banks in creating financial inclusion and the future strategy they need to adopt to make further progress. the important objectives under financial inclusion were aptly deliberated by the committee on financial inclusion and the committee on financial sector reforms headed by respected dr. rangarajan and dr. raghuram rajan. these reports have spelt out the imperative need to modify the credit and financial services delivery system to achieve greater inclusion. the full implementation of the recommendations made in these reports will definitely go a long way to modify particularly the credit delivery system of the banks and other related institutions to meet the credit requirements of marginal and sub - marginal farmers in the rural areas in a fuller measure. bis central bankers ’ speeches national focus on inclusive growth today, there is a national as well as global focus on inclusive growth. the financial stability and development council ( fsdc ) headed by the finance minister is mandated to focus on financial inclusion and financial literacy. all financial sector regulators including the reserve bank of india are committed to the mission. and, very publicly, so are banks and other financial sector entities. if we are advocating any kind of stability whether financial, economic, political or social and inclusive growth with stability, it is not possible to attain these goals without achieving financial inclusion. financial inclusion promotes thrift and develops culture of saving, improves access to credit both entrepreneurial and emergency and also enables efficient payment mechanism, thus strengthening the resource base of the financial institution which benefits the economy as resources become available for efficient payment mechanism and allocation. empirical evidence shows that countries with large proportion of population excluded from the formal financial system also show higher poverty ratios and higher inequality. thus, financial inclusion is no longer a policy choice today but a policy compulsion. and, banking is a key driver for financial inclusion / inclusive growth. role of banks but, it is well recognized that there are supply side and demand side factors driving inclusive growth. banks and other financial services players are largely expected to mitigate the supply side processes that prevent poor and disadvantaged social groups from gaining access to

by the banks and our objective of achieving universal financial inclusion is attainable. but, it is not automatic and cannot be taken for granted. there are a number of issues and challenges that have to be surmounted. way forward – future of financial inclusion i. one of the major challenges under financial inclusion has been addressing the last mile connectivity problem. for addressing this issue and for achieving the goals set, experts have recommended the business correspondent / facilitator ( bc / bf ) model. though the bc model may not be commercially viable at the initial stage due to high transaction costs for banks and customers, the appropriate use of technology can help in reducing this. the need is to develop and implement scalable, platformindependent technology solutions which, if implemented on a large scale, will bring down the high cost of operation. appropriate and effective technology, thus, holds the key for financial inclusion to take place on an accelerated scale. ii. banks need to perfect their delivery and business model. a number of different models involving handheld devices with smart cards, mobiles, mini atms, etc are being tried out and it is necessary that they are integrated with the backend cbs system for scaling up. a good delivery model is also needed and, perhaps, even more so if there is a glitch and customer grievances needs to be resolved expeditiously. thus, the time is approaching when these various experiments with different models are taken to their logical conclusion and banks start scaling up their implementation. at the same time, banks must also have an integrated business model. these hold the key to the success and failure of the financial inclusion efforts. iii. in addition to this, rbi has advised banks to focus more towards opening of brick & mortar branches in unbanked villages. these branches can be low cost intermediary simple structures comprising of minimum infrastructure for operating small customer transactions and supporting up to 8 – 10 bcs at a reasonable distance of 2 – 3 kms. this will lead to efficiency in cash management, documentation and redressal of customer grievances. such an approach will also act as an effective supervisory mechanism for bc operations. another very important thing is that banks have to realise that for business correspondent ( bc ) model to succeed, the bcs, who are the first level of contact for customers, have to be compensated adequately so that they too see this as a business opportunity iv. as mentioned earlier, banks should strive to provide a minimum of four