duvvuri subbarao : mint road milestones talking points by dr duvvuri subbarao, governor of the reserve bank of india, at the inauguration of newsibition, kolkata, 8 december 2010. * * * i am delighted to inaugurate this newsibition of the reserve bank in this city of joy. last year, the reserve bank celebrated our platinum jubilee. as part of the celebrations, we documented the 75 years of the reserve bank ’ s history in the form of a book – mint road milestones. milestones is rich treasure trove of archival material including, photographs, news clippings, documents along with a commentary which weaves them all together in an interesting narrative. in fact, the material that we collected was so interesting and rare that we thought it would be a great public service to put it up all in the form of an exhibition and make it accessible to a much wider audience. but why are we setting up the exhibition in kolkata? because, kolkata is where it all began. the reserve bank ’ s first central office was located here in this very building. it is thus appropriate that any effort to document the banks past and project its future be located here. this exhibition is a part of the bank ’ s outreach efforts to demystify the central bank. it seeks to introduce the viewer to the broad canvas, considerations and changing facets of thought that lay behind the bank ’ s policy efforts over the years. the display is divided into nine sections representing different phases in the bank ’ s evolution. these take the viewer down 75 years of central banking history covering critical events and policies. the reserve bank took birth here in kolkata on april 1, 1935 as a private shareholders institution. it shifted to mumbai shortly thereafter and was nationalized in 1949. soon after independence, the bank repositioned itself to meet the aspirations of an infant democracy and dovetailed its functions to the demands of a poor country with ambitious development goals. the 60s were a period of institution building where the reserve bank helped formalize systems for agricultural and industrial credit ; catalyzed institutions such as the state finance corporations and helped set up the deposit insurance corporation, the unit trust of india as the first mutual fund, the idbi as an apex development bank, etc. the 70s saw the nationalization of banks which heralded a new era when banking was taken from the classes to the masses. this was also the period when banks performed a critical role in

country today, the msme sector stands as a beacon of hope. realizing the potential that the sector holds, both government of india and reserve bank of india have been laying substantial emphasis on means to energize the sector. among the goi initiatives that have a bearing on the sector are provision for udyog aadhaar, start - up india, make in india and steps for improving “ ease of doing business ” in the country. likewise, reserve bank of india has also been very conscious of the needs of the msmes and has hence, initiated a plethora of steps to support them through their lifecycle. i will delve upon some of these measures in the course of my address today. strengthening the banking system for lending to msmes 4. with a view to strengthen the reach and scope of credit delivery mechanism for small entrepreneurs and businesses, rbi has recently issued in - principle approvals for setting up of 10 small finance banks ( sfbs ). the sfbs are mandated to extend 75 per cent of their adjusted net bank credit ( anbc ) to the sectors eligible for classification as priority sector lending ( psl ) by rbi. further, these banks are also mandated to ensure that at least 50 per cent of their loan portfolio should constitute of loans and advances of up to annual report ministry of micro, small and medium enterprises 2014 – 15. bis central bankers ’ speeches rs. 25 lakh. this is intended to ensure that these sfbs have a diversified loan book with exposures to small entrepreneurs. we believe that together with the existing players, these banks would be able to meet the credit needs of small businesses in a holistic and timely manner, which is so central to the financing needs of the msmes. 5. the recent revision to the priority sector lending guidelines has also sought to facilitate flow of credit to the sector. while on the one hand, the target for banks ’ lending to micro enterprises has been progressively increased to 7 percent by march 2016 and 7. 5 percent by march 2017, medium enterprises have been brought within the ambit of priority sector, whereby all loans to medium enterprises in the manufacturing sector and those up to rs. 10 crore in the service sector now qualify for priority sector classification. 6. an extremely important, but relatively much less appreciated aspect of credit delivery system is the availability of trained human capital within the banks. bankers ought to have a sound understanding of the businesses that they finance. in respect of established businesses with predictable cash flows,