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Policy changes for inclusionPosted on July 29, 2014 by Sumita
Kale
After a short lull, the financial inclusion policy space is on
the move again. The DFS is set to unveil an ambitious new planon
August 15th. The scheme to be named Sampoorn Vittiyea Samaveshan
(SVS) envisages bank accounts for everyIndian and banking services
within 5km of every town and village, and all by March 2016! The
focus will be onhouseholds, not on villages unlike the previous
plan, and apart from a basic bank account, the scheme includes
anoverdraft 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 thesingle point for
government benefit receipts.
The government does plan to tap all existing networks for
thisnot just the banks, but post offices, payments banks etcas
well. One of the main problems that plague the current scenario is
the low commercial viability of the BC agents, herethe government
proposes to set remuneration at Rs.5,000 per month. It appears that
this payout will also fall on thebanks. Banks also have to now make
sure that every transaction is part of the digital online system,
connected to the corebanking network. So there are quite a few many
changes in the offing.
In addition to the DFSs plan, the RBI has also gone ahead. Draft
guidelines for Payments Banks have been released forfeedback, and
in a recent speech HR Khan has given a concise summary of inclusion
in rural India, mentioning the intentto tap into non-bank networks
as well:
Several initiatives have been undertaken to expand banking
services to remote areas of the country. The branchauthorisation
policy has recently been rationalised, with commercial banks
directed to open not less than a quarter of theirtotal branches in
hitherto unbanked areas. Given the challenges involved in opening
brick-and-mortar branches at a rapidpace due to resource and time
constraints, banks have been encouraged to avail of Business
Correspondents (BCs)/Business Facilitators (BFs) to further their
inclusion efforts. Further, the Reserve Bank has now removed some
of themajor restrictions on use of BC model; it has allowed
for-profit NBFCs to work as BCs and the requirement of
BCtouch-point being within 30 km radius of the bank branch has been
dispensed with. Banks have been persuaded to switchover to Core
Banking Solutions (CBS) and leverage technology to the maximum
extent possible. The growing focus onmobile technology to deliver
banking services is a manifestation of this initiative. Similarly,
importance being attached tonon-banks and quasi-banks (payment
banks, which are in the offing, can also function as BC of other
banks), is also tobe seen in the context of efforts to expand
financial inclusion through technology based payment system
products. Withthe cloud over Aadhar based unique identity being
cleared, the pilots sponsored by the Reserve Bank for
remittancerelated cash-outs using pre-paid instruments are expected
to gather momentum and could turn out to be a major initiativein
financial inclusion without the necessity of having bank
accounts.
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