practices when they are being undertaken, and demand banks hold adequate risk buffers. the important duty of the regulator is to force timely recognition of npas and their disclosure when they happen. forbearance may be a reasonable but risky regulatory strategy when there is some hope that growth will pick up soon and the system will recover on its own. everyone – banker, promoter, investors, and government officials – often urge such a strategy because it kicks the problem down the road, hopefully for someone else to deal with. the downside is that when growth does not pick up, the bad loan problem is bigger, and dealing with it is more difficult. it is when the bad loan problem is allowed to accumulate through forbearance or non - recognition that regulators have the difficult task of bringing the system back on track. that is the problem we have had to deal with at the rbi. as i have shown you, the consequence since early 2014 of the past build - up of stressed loans was a slowdown in public sector bank lending in certain sectors. the cessation of rbi forbearance and the asset quality review in mid 2015 were therefore not responsible for the bis central bankers ’ speeches slowdown. instead, high distressed exposures in certain sectors were already occupying psb management attention and holding them back. the only way for them to supply the economy ’ s need for credit, which is essential for higher economic growth, was to clean up and recapitalize. the silver lining message in the slower credit growth is that banks have not been lending indiscriminately in an attempt to reduce the size of stressed assets in an expanded overall balance sheet, and this bodes well for future slippages. in sum, to the question of what comes first, clean up or growth, i think the answer is unambiguously “ clean up! ”. indeed, this is the lesson from every other country that has faced financial stress. it is important, therefore, that the clean - up proceeds to its conclusion, without any resort to regulatory forbearance once again. sometimes, easier monetary policy is proposed as an answer to reducing the bad debt problem. for the heavily indebted promoter, however, easier monetary policy will typically bring no relief. even with lower policy rates, the bank, which is typically not made whole even if it grabs all the borrower ’ s cash flows, has no incentive to reduce the interest rate the borrower can pay.

annual review meetings are being held with cmds of banks to ensure top management support and commitment to the fi process. what has been achieved so far? 15. a snapshot of the progress made by banks under the fips ( april 10 – march 13 ) for key parameters, during the three year period is as under : nearly 2, 68, 000 banking outlets have been set up in villages as on march 13 as against 67, 694 banking outlets in villages in march 2010 about 7400 rural branches opened during this period nearly 109 million basic savings bank deposit accounts ( bsbdas ) have been added, taking the total no. of bsbdas to 182 million. share of ict based accounts have increased substantially – percentage of ict accounts to total bsbdas has increased from 25 % in march 10 to 45 % in march 13 with the addition of nearly 9. 48 million farm sector households during this period, 33. 8 million households have been provided with small entrepreneurial credit as at the end of march 2013 with the addition of nearly 2. 25 million non farm sector households during this period, 3. 6 million households have been provided with small entrepreneurial credit as at the end of march 2013. about 4904 lakh transactions have been carried out in ict based accounts through bcs during the three year period 16. it is important to analyse this progress against the some disconcerting trends that were noticed in the run up to the structured financial inclusion initiatives that the banks launched since 2010 onwards. first, the number of banked centres in the country between 1991 and 2007 had actually come down ( from 35236 to 34471 ). second, the number of rural branches during the same period had also declined significantly ( from 35206 to 30409 ). against this backdrop, the progress made during 2010 – 13 is certainly remarkable. financial inclusion plan 2013 – 16 17. in order to continue with the process of ensuring access to banking services to the excluded, banks have now been advised to draw up a fresh 3 year financial inclusion plan for the period 2013 – 16. banks have also been advised that the fips prepared by them are disaggregated and percolated down up to the branch level. the disaggregation of the plans is being done with a view to ensure involvement of bank staff across the hierarchy, in the fi efforts and also to ensure uniformity in the reporting structure under the financial inclusion plan. the focus is also now more on the