ET Mumbai 08/02/2010
MUMBAI: Finance Minister Pranab Mukherjee urged banks and their technology partners to work together to reach out to the unbanked and help the
government achieve its goal of inclusive growth through financial inclusion.
"I urge you all to come together to hasten this process so that financial inclusion can also help the government reach the benefits of social security efforts, NREGA payments to the rural poor directly through the banking system, thus reducing the time and transaction costs," said Mr Mukherjee while addressing State Bank of India's 'World Premiere Technology in Concert'—an event organised on the occasion of the bank's completion of several technology and other business initiatives—in Mumbai on Sunday.
Mr Mukherjee highlighted that over half a million farmer households in the country today still do not have any access to credit from institutional sources. Therefore, financial inclusion and the extension of financial services to every citizen of the country is a priority for the government, he said.
Banks today need to leverage modern technologies such as internet, mobile, smart cards, biometric authentication in their efforts to provide banking and financial services to the rural populace, and thereby create hitherto unprecedented economic opportunities.
Earlier during a panel discussion, Jeffrey Sachs, director, Earth Institute Colombia University, praised India's efforts toward financial inclusion and the role technology and telecommunications have played in the process.
He told the gathering, which included top CEOs and bankers, "The (developing) world is seeing what you all are doing. So what you do will empower not only Indians, but also the rest of the world."
He made a reference to African economies trying to learn from the Indian experience in the use of technology in financial inclusion.
Another panellist Reliance Industries chairman Mukesh Ambani said that India would emerge among the top three economies in the world over the next two decades largely by using its own talent and creating scale.
Bharti group chairman Sunil Mittal, speaking on the role that information communication and technology (ICT) will play in future, said that banks may not need to set up either new branches or ATMs as mobile technology will be able to enable the cell user with all banking services, provided there is the requisite policy support. He urged the finance minister to do whatever was necessary to achieve this.
BS Reporter / Chennai/ Bangalore February 09, 2010, 0:03 IST
Financial inclusion to cover villages of over 2,000 people
The State Level Bankers’ Committee (SLBC) has initiated steps to begin a renewed drive to achieve financial inclusion in the state by opening “no frills” accounts for families that do not have a bank account. It has set a target to bring all villages in Karnataka with a population of more than 2,000 under the banking fold by March 31, 2010, a senior banker said.
“All households across all villages in the state which have been issued photo identity cards by the state government will be covered under the financial inclusion programme with the opening of “no frills” accounts by March 31, 2010,” Basant Seth, CMD, Syndicate Bank told the SLBC meeting, here on Monday.
Seth, who is also the chairman of SLBC, said all families who do not have a bank account on the basis of the data from the department of food and civil supplies would be brought under the new programme. In order to focus on the quality of financial inclusion, at least 50 per cent of all the “no frills” accounts existing as on March 31, 2009, would be made active by March 31, 2010.
As another step towards financial inclusion, he said, lead district managers have been instructed to constitute a sub-committee of the district consultative committee to draw up a roadmap by March 2010 to provide banking services through a banking outlet in every village having a population of over 2,000, by March 2011.
In order to step up financial inclusion programme, the banks should make use of technology-based banking models, including Business Correspondents, Business Facilitators.
He, however, advised all banks to not just focus on opening bank accounts, but focus on operationalising such accounts by allowing a small overdraft, issuing general credit card and providing remittance and insurance facility. All banks should at least provide a small overdraft of Rs 500 or some micro insurance/remittance to the “no frills” account holders.
Seth also suggested all banks in the state make all efforts to issue at least 200,000 smart cards by February-end 2010 so that the electronic benefit transfer system (EBT) can be launched across the state on the basis of the experience gained in implementing the pilot projects.
Presently, two pilot projects are underway to implement the EBT system on a ‘One district, One bank’ model in three districts by State Bank of Mysore in Chamarajanagar, Axis Bank in Dharwad and Vijaya Bank in Mandya. The lead banks are implementing other pilot projects in Bellary, Chitradurga and Gulbarga districts for payment of social security pensions and wages under the Mahatma Gandhi National Rural Employment Guarantee Scheme.
Based on the experience, the government will take a decision to implement the better of the two models for extending EBT scheme to the entire state, Seth added.