MONTHLY ARCHIVES: JULY, 2014
After a short lull, the financial inclusion policy space is on the move againThe DFS is set to unveil an ambitious new plan on August 15thThe scheme to be named Sampoorn Vittiyea Samaveshan (SVS) envisages bank accounts for every Indian and banking services within 5km of every town and village, and all by March 2016! The focus will be on households, not on villages unlike the previous plan, and apart from a basic bank account, the scheme includes an overdraft facility of Rs.5,000 and a Rupay-enabled debit and ATM card with inbuilt accident insurance cover of Rs.1 lakh The intent is there to link to technology and here the Aadhaar number will be most useful, this account will also be the single point for government benefit receipts.
The government does plan to tap all existing networks for this...not just the banks, but post offices, payments banks etc as wellOne of the main problems that plague the current scenario is the low commercial viability of the BC agents, here the government proposes to set remuneration at Rs.5,000 per monthIt appears that this payout will also fall on the banksBanks also have to now make sure that every transaction is part of the digital online system, connected to the core banking networkSo there are quite a few many changes in the offing.
In addition to the DFS's plan, the RBI has also gone aheadDraft guidelines for Payments Banks have been released for feedback, and in a recent speech HR Khan has given a concise summary of inclusion in rural India, mentioning the intent to tap into non-bank networks as well:
Several initiatives have been undertaken to expand banking services to remote areas of the countryThe branch authorisation policy has recently been rationalised, with commercial banks directed to open not less than a quarter of their total branches in hitherto unbanked areasGiven the challenges involved in opening brick-and-mortar branches at a rapid pace due to resource and time constraints, banks have been encouraged to avail of Business Correspondents (BCs)/ Business Facilitators (BFs) to further their inclusion effortsFurther, the Reserve Bank has now removed some of the major restrictions on use of BC model; it has allowed for-profit NBFCs to work as BCs and the requirement of BC touch-point being within 30 km radius of the bank branch has been dispensed withBanks have been persuaded to switch over to Core Banking Solutions (CBS) and leverage technology to the maximum extent possibleThe growing focus on mobile technology to deliver banking services is a manifestation of this initiativeSimilarly, importance being attached to non-banks and quasi-banks ("payment banks , which are in the offing, can also function as BC of other banks), is also to be seen in the context of efforts to expand financial inclusion through technology based payment system productsWith the cloud over Aadhar based unique identity being cleared, the pilots sponsored by the Reserve Bank for remittance related cash-outs using pre-paid instruments are expected to gather momentum and could turn out to be a major initiative in financial inclusion without the necessity of having bank accounts.
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