k c chakrabarty : social banking and finance – opportunities in inclusion session keynote address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the 2nd ft - yes bank international banking summit, mumbai, 15 october 2012. * * * assistance provided by shri r. k. jain and shri bipin nair in preparation of this address is gratefully acknowledged. mr james crabtree, mumbai correspondent, financial times and moderator for the session, my fellow panellists mr y. m. deosthalee, cmd l & t finance ; mr ajai kumar, cmd corporation bank ; mr m. v. tanksale, cmd central bank of india ; mr r. v. verma, cmd national housing bank ; mr ajay desai, chief financial inclusion officer, yes bank and mr leonardo rubattu, general manager, iccrea banca ; other important people sitting in the audience specially dr rana kapoor, founder, md and ceo, yes bank and mr james lamont, managing editor, financial times ; delegates to the conference ; members of the print and electronic media, ladies and gentlemen. it is, indeed, a matter of great pleasure and privilege for me to be present here today at the 2nd ft - yes bank international banking summit 2012 and share some of my thoughts with you on the topic for the session : “ social banking and finance – opportunities in inclusion ”. the topic is very relevant, particularly in the light of the prevailing global economic crisis, which was, in part, attributed to the financial system losing its social orientation and growing into an exclusive universe, disconnected from the real sector. social banking and financial inclusion present a significant challenge and a unique opportunity to build a broad based and stable financial system, subservient and contributing to growth in the real sector and overall economic prosperity of the masses. it is also very germane to the overall theme of the conference on “ realigning the global banking system ” as inclusiveness and social orientation needs to be the key pillar around which the post - crisis global financial architecture is developed. i, therefore, congratulate financial times and yes bank for including this theme in the conference and look forward to a useful brainstorming session ahead. what is social banking? before delving into the nuances of social banking, let me briefly dwell on what is social business, or more specifically, social banking. in my opinion, any activity which is viewed by society as

of banking technology and the realization that poor are bankable, the coverage of unbanked population into the financial system is expected to improve. financial inclusion, along with government ’ s developmental programmes, is expected to result in overall financial and economic development in the country. as in the case of most developing countries, extending the banking services to unbanked groups is expected to be the key driver for inclusive growth. developing innovative delivery channels would be the key to our financial inclusion initiatives. there are several success stories globally where market players have worked out innovative models, often harnessing on technology, to overcome financial exclusion barriers. mobile phone services for instance, have been harnessed by several jurisdictions such as kenya, through their m - pesa model, for providing access to financial services to people. the fact that there is a huge mass of people with mobile phones, but no bank accounts highlights the potential available through this channel. similarly, use of microfinance, banking agents, etc by various jurisdictions has resulted in impressive gains from a financial inclusion perspective. in india, the policy framework is already in place. however, an efficient business model and delivery platform for provision of services by financial service providers is still evolving. banks, in collaboration with other stakeholders and civil society, are working towards stabilizing and scaling up their models for social banking. as mentioned previously, we are pursuing bank - led model which leverages on technology to expand coverage and minimise cost of providing service. we are technology neutral and banks can select any technology bis central bankers ’ speeches option. we encourage banks to develop models which can operate in a viable and sustainable manner. conclusion in the wake of the financial crisis and growing disenchantment among the general public, reflected in the “ occupy wall street ” and similar protest movements worldwide, the consequent reform measures have focussed on promulgating laws which seek to exercise greater control over the investment practices of banks and to limit speculation. what appears as a more promising approach in the long run is to develop socially, morally and ethically responsible banking practices oriented towards all stakeholders, even while pursuing profit motives. social banking model can emerge as a very sustainable model that can emancipate the global financial system from some of the ills that plague it at the present moment. the impetus for social banking can come from two approaches – one of them being through legal and regulatory requirements. this approach could, however, result in social banking being pursued only from a compliance perspective. the other