system and thereby obviate the need to go back to the informal system. banks, however need to give wide publicity to the scheme at their rural and semi urban branches. in case where the loans are under government sponsored schemes the state level bankers'committee ( slbc ) is expected to evolve a suitable policy. v. in urban areas, credit cards enable households to manage to get their credit needs met by the banking system, with not only the ability to make purchases on credit but also facility to draw cash against card. in the rural areas, there are no points of sale or outlets where plastic cards can be used. banks have been recently advised by rbi to provide a general purpose credit card ( gcc ) facility at their rural and semi urban braches the credit facility extended under the scheme will be in the nature of revolving credit. the gcc - holder will be entitled to draw cash from the specified branch of bank up to the limit sanctioned. banks would have flexibility in fixing the limit based on the assessment of income and cash flow of the entire household. however, the total credit facility under gcc for an individual should not exceed rs. 25, 000. interest rate on the facility may be charged as considered appropriate and reasonable. the borrowers would be eligible for availment of the credit facilities provided under gcc, as per their requirement, without any insistence on security and the purpose or end - use of the credit. fifty per cent of credit outstanding under gcc up to rs. 25, 000 will be eligible for being treated as indirect agricultural financing coming under the ambit of priority sector lending norms. the eligibility criteria will be subject to review. it is not necessary that gcc should be linked to purchases and gcc may not necessarily be in the form of a card. gcc can be issued in the form of a pass book, if the holder of gcc desires to operate cash withdrawals from bank branches. it is expected that banks will come out with their own schemes to popularise this product amongst the rural clientele. vi. a major recommendation made by the internal group set up by rbi on micro finance ( khan committee ), currently under consideration, is to permit banks to use micro finance institutions as business facilitators and correspondents to enable banks to increase their outreach and ensure greater financial inclusion. this recommendation which will lead to provision of micro - finance services at the doorstep of the customer, can make substantial change in the availability of comprehensive financial services in rural

also true that in itself globalization will not benefit those countries that are not prepared to take advantage of the new system. in order to benefit from a globalised economy, i do recognize three issues that are of critical importance. first, a country needs to ensure that it has the necessary human skills capable of competing effectively within the world economy. second, a country would need to have an institutional arrangement that conforms to international standards. examples here are that your institutions must practice good governance ; you must have an effective accounting regime ; and you must have clear demarcation of functions and responsibilities among your institutions. the third issue i believe is important is an effective legal framework, where businesses and individuals alike are certain that their legal contracts are enforceable in a timely manner. in our region, the increasing interest and momentum for the creation of a monetary union seems to revolve around two main considerations. the first is that the establishment of a monetary union in combination with free trade agreements is increasingly being seen as part of a strategic push to integrate the region. in this regard, a monetary union is seen as a way of reinforcing regional cohesion and demonstrating a commitment to regional solidarity. indeed, the harmonization and unification of monetary policy represents the deepest form of economic and financial integration. the second consideration for the formation of a monetary union is the desire to counteract perceived economic and political weakness which dates back to the period of colonial rules by putting in place regional institutions, of which a monetary union and common currency would be strong symbols. it would also appear that the launching of the european monetary union has influenced this process. a strong argument and motivation for a monetary union is that it brings a number of benefits. the most often cited benefits are the increased intra trade, price stability, increased aggregate investment, and the elimination of the exchange rate risk. it is argued that the elimination of the exchange rate risk would allow for increased capital inflow and regional investment opportunities resulting in welfare gains and growth. it also reduces transaction cost within the region incurred when changing one currency to another. besides increased intra - trade, economic theory and experience also suggest that a single regional currency is expected to have a more stable internal and external value. therefore, the benefits of price stability and monetary policy credibility are more likely to be realized in a monetary union. this is especially true if the regional monetary authority is autonomous in carrying out its functions and where its primary objective is price stability. it is also suggested that a monetary union would improve macro