RBI's Renewed Focus On Financial Inclusion Aims At Improving Credibility Of Monetary Policy

Monetary policy frameworks in India have evolved in line with the developments in theory and country practices, the changing nature of the economy and developments in financial markets, noted Shaktikanta Das, Governor, Reserve Bank of India in a speech titled Seven Ages of India's Monetary Policy. Within the broad objectives, however, the relative emphasis on inflation, growth and financial stability has varied across monetary policy regimes.

Although global experience with financial stability as an added policy objective is still unsettled, the Reserve Bank has always been giving due importance to financial stability since the enactment of the Preamble to the RBI Act. The regulation and supervision of banks and non-bank financial intermediaries has rested with the Reserve Bank and has kept pace with the prescribed global norms over time. More recently, the focus of financial stability has not only confined to regulation and supervision but also extending the reach of formal financial system to the unbanked and unserved population.

Apart from financial inclusion, there is also a focus on promoting secured, seamless and real-time payments and settlements. This renewed focus on financial inclusion and secured payments and settlements are not only aimed at promoting the confidence of general public in the domestic financial system but also improving the credibility of monetary policy for price stability, inclusive growth and financial stability.

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