Credit Rating and Information Services of India (Crisil) is developing an index to analyse the management of over 5 crore no frills accounts operated by Indian banks in rural and semi-urban areas, a top official said today.
"There are about 5 crore no frills accounts in the country and the operational nature of these accounts varies from bank to bank. In order to assess the operational nature of the banks, Crisil is developing an index for financial institutions on how much these accounts are operational," Department of Financial Services Secretary D Gopalan told reporters here.
"Based on that, banks' performance will be evaluated," he added.
Gopalan said, "When the government evaluates the bank's performance, the index developed by Crisil would be applied and it will assess how these no frills accounts are and how they are operational."
About 38,000 habitations in rural and semi-urban areas are covered under the banking correspondents model, while plans are being unfolded to cover another 73,295 habitations, hitherto uncovered.
After participating in a review meeting that lasted more than three hours, he said 10 South-based banks participated in the meeting and announced that the government is in the process of working out regulations for microfinance institutions.
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"There is a regulation for financial institutions in the offing. We are consulting with the stakeholders... It has to be taken forward, which means we have to take it to Cabinet... then it has to be taken to Parliament and there are timelines for all this...," he said.
Stating that human resources management was one of the main challenges for the banking industry, he said the number of bank employees retiring in the next few years was going to be huge.
"There are about three to five lakh retirements in the next three-five years...," he said.
Several issues, particularly the enrollment of business correspondents, the status of banking services in rural areas and training of business correspondents, were also discussed at the meeting.