Financial Inclusion – RBI Policy Initiatives
- Advised all banks to open Basic Saving Bank Deposit (BSBD) accounts with minimum common facilities such as no minimum balance, deposit and withdrawal of cash at bank branch and ATMs, receipt/ credit of money through electronic payment channels, facility of providing ATM card.
- Relaxed and simplified KYC norms to facilitate easy opening of bank accounts, especially for small accounts with balances not exceeding Rs. 50,000 and aggregate credits in the accounts not exceeding Rs. one lakh a year. Further, banks are advised not to insist on introduction for opening bank accounts of customers. In addition, banks are allowed to use Aadhar Card as a proof of both identity and address.
- Simplified Branch Authorization Policy, to address the issue of uneven spread bank branches, domestic SCBs are permitted to freely open branches in Tier 2 to Tier 6 centers with population of less than 1 lakh under general permission, subject to reporting. In North-Eastern Sates and Sikkim domestic SCBs can open branches without having any permission from RBI. With the objective of further liberalizing, general permission to domestic scheduled commercial banks (other than RRBs) for opening branches in Tier 1 centres, subject to certain conditions.
- Compulsory Requirement of Opening Branches in Un-banked Villages, banks are directed to allocate at least 25% of the total number of branches to be opened during the year in un-banked (Tier 5 and Tier 6) rural centers.
- Opening of intermediate brick and mortar structure, for effective cash management, documentation, redressal of customer grievances and close supervision of BC operations, banks have been advised to open intermediate structures between the present base branch and BC locations. This branch could be in the form of a low cost simple brick and mortar structure consisting of minimum infrastructure such core banking solution terminal linked to a pass book printer and a safe for cash retention for operating larger customer transactions.
- Public and private sector banks had been advised to submit board approved three year Financial Inclusion Plan (FIP) starting from April 2010. These policies aim at keeping self-set targets in respect of rural brick and mortar branches opened, BCs employed, coverage of un-banked villages with population above 2000 and as well as below 2000, BSBD accounts opened, KCCs, GCCs issued and others. RBI has been monitoring these plans on a monthly basis.
- Banks have been advised that their FIPs should be disaggregated and percolated down up to the branch level. This would ensure the involvement of all stakeholders in the financial inclusion efforts.
- In
June 2012, revised guidelines on Financial
Literacy Centres (FLCs). Accordingly, it was advised that FLCs and
all the rural branches of scheduled commercial banks should scale up
financial literacy efforts through conduct of outdoor Financial Literacy
Camps at least once a month, to facilitate financial inclusion
through provision of two essentials i.e. ‘Financial Literacy’ and easy
‘Financial Access’. Accordingly, 718 FLCs have been set up as at end of
March 2013. A total of 2.2 million people have been educated through
awareness camps / choupals, seminars and lectures during April 2012 to
March 2013.
Recent Measures –
- Licensing of New Banks: The present round of licensing new banks is essentially aimed at giving further fillip to financial inclusion efforts in our country. Innovative business models aimed at furthering financial inclusion efforts would be looked into closely in processing applications for banking license. Financial inclusion plan would be an important criterion for procuring new bank licenses.
Read http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=838
- Nachiket Mor Committee recommendations Feb 2014
ü Each
Low income household and small business should be able to access credit needs
ü by January 1, 2016, each district would have a
total deposits and investments to GDP ratio of at least 15 per cent
ü providing a universal bank
account to all Indians above the age of 18 years by Jan 1, 2016
ü a vertically differentiated
banking system with payments banks for deposits and payments and wholesale
banks for credit outreach
- committee proposes an adjusted 50 per cent priority sector lending target with adjustments for sectors and regions based on difficulty in lending.
- advocates fewer NBFCs and substantial regulatory convergence for them with banks on non-performing assets and the extension of securitisation laws to certain NBFCs
- A state-level regulatory commission will consolidate supervision of all non-governmental organisations and money service businesses.
