Read the passage and answer the following questions:
In calibrating the regulatory framework for basic financial services to the poor, regulation should be calibrated according to the risks incurred for the financial system. In the case of systematically- important financial institutions whose failure can lead to large economic costs within a country or even beyond, a regulation that seems costly from a short- term perspective may easily pay for itself by staving off costly financial crises.
In the case of basic financial services for the poor, the danger seems not so many systemic repercussions that might impose large financial costs; the danger is more that such services do not emerge in the first place, and financial inclusion simply does not happen. In that perspective, it may be advisable to experiment and to encourage the emergence of a wide range of specialized, ‘unbundled’ financial services for the poor-like the no-frills account that we have tried in India. And consider a stronger regulatory response if and when particular bundles of service emerge and grow towards size and importance that could pose risks for financial stability.
Therefore, possible market failure needs to be weighed against possible regulatory failure: regulatory efforts may be captured by commercial interests or affected by political considerations an additional reason not to stifle promising approaches through regulatory responses to innovation and new business models that can help poor people.