FINANCIAL INCLUSION VIABLE ONLY IF NO-FRILLS ACCOUNTS GET LOANS

The entire financial inclusion initiative is not a viable business opportunity unless banks offer loans to the no-frills account holders, said Dr K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, at the two-day Conference of Front-line Managers on Implementing Financial Inclusion.

 “Deposit collection alone will not give you returns, only providing loans will,” he told.

 “To bring in financial inclusion faster, technology and digital connectivity should be available,” said Dr Chakarbarty. Like the emphasis on a school in every village, there should be a bank too in each and every village, he added. “Everybody should be linked to a bank account and this has to be carried out on a mission mode.” Financial inclusion should be the first priority for banks, he pointed out. Banks should offer four services — savings account, pure deposit product, immediate/emergency credit and entrepreneurship credit to account-holders.

He urged banks to look at the business opportunity that these no-frill account-holders bring in. As a majority of the below-the-poverty line population is expected to come above the poverty line, this segment gains a lot of significance, he said.

Besides, banks should also ensure that a proper customer service mechanism is in place, said Dr Chakrabarty.

‘Protected environment'

“It is a protected environment now,” he said, adding that more competition in the banking sector in the form of new banking licences could also ensure better customer service.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article1093293.ece