 "By Jan 2016, all Indian adults would have bank accounts, envisions RBI Panel")
By January 1, 2016 each Indian resident, above the age of eighteen years, would have an individual, full-service, safe, and secure electronic bank account. This is the vision that the Reserve Bank of India (RBI)'s Committee Report on Comprehensive Financial Services for Small Businesses and Low Income Households headed by Nachiket Mor envisions.
RBI's Committee Report said that by January 1, 2016, each low-income household and small-business would have convenient access to formally regulated lenders that have the ability to assess and meet their credit needs, and offer them a full-range of suitable credit products, at an affordable price.
Some panel members, however, have said that it may be difficult to implement these services by January 2016. "While January 2016 can be an aspirational goal, given the scale of the task a target date of January 2018 may be more realistic and implementable," said Shikha Sharma, MD & CEO of Axis Bank and S S Mundra, CMD, Bank of Baroda in their written views on the report.
"Each such point would allow residents to deposit and withdraw cash to and from their bank accounts and transfer balances from one bank account to another, in a secure environment, for both very small and very large amounts, and pay reasonable charges for all of these services," said RBI in the report.
The Nachiket Mor committee also said that every resident should be issued a Universal Electronic Bank Account (UEBA) automatically at the time of receiving their Aadhaar number by a high quality, national, full-service bank. The report further added that under the Banking Regulation Act, a set of banks may be licensed which may be referred to as Wholesale Banks. These banks will have the primary role of lending and not the provision of retail deposit services and hence will only be permitted to accept deposits larger than Rs 5 crore.
The minimum entry capital requirement for Wholesale Banks will be Rs 50 crore compared to the Rs 500 crore required for full-service Scheduled Commercial Banks (SCBs).
In order to guard against large scale defaults resulting from catastrophic events, the committee said that banks should be permitted to work closely with insurance companies to purchase bank-wide portfolio level insurance against events such as large scale rainfall failure on a regional or national basis, instead of having an expectation that relief would be provided from national or state budgets.
The Committee recommends that a unified Financial Redress Agency (FRA) be created by the Ministry of Finance as a unified agency for customer grievance redress across all financial products and services which will in turn coordinate with the respective regulator.
RBI's Committee Report said that by January 1, 2016, each low-income household and small-business would have convenient access to formally regulated lenders that have the ability to assess and meet their credit needs, and offer them a full-range of suitable credit products, at an affordable price.
Some panel members, however, have said that it may be difficult to implement these services by January 2016. "While January 2016 can be an aspirational goal, given the scale of the task a target date of January 2018 may be more realistic and implementable," said Shikha Sharma, MD & CEO of Axis Bank and S S Mundra, CMD, Bank of Baroda in their written views on the report.
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The committee also has a vision of giving ubiquitous access to payment services and deposit products at reasonable charges. It said that by January 1, 2016, the number and distribution of electronic payment access points would be such that every single resident would be within a fifteen minute walking distance from such a point anywhere in the country.
"Each such point would allow residents to deposit and withdraw cash to and from their bank accounts and transfer balances from one bank account to another, in a secure environment, for both very small and very large amounts, and pay reasonable charges for all of these services," said RBI in the report.
The Nachiket Mor committee also said that every resident should be issued a Universal Electronic Bank Account (UEBA) automatically at the time of receiving their Aadhaar number by a high quality, national, full-service bank. The report further added that under the Banking Regulation Act, a set of banks may be licensed which may be referred to as Wholesale Banks. These banks will have the primary role of lending and not the provision of retail deposit services and hence will only be permitted to accept deposits larger than Rs 5 crore.
The minimum entry capital requirement for Wholesale Banks will be Rs 50 crore compared to the Rs 500 crore required for full-service Scheduled Commercial Banks (SCBs).
In order to guard against large scale defaults resulting from catastrophic events, the committee said that banks should be permitted to work closely with insurance companies to purchase bank-wide portfolio level insurance against events such as large scale rainfall failure on a regional or national basis, instead of having an expectation that relief would be provided from national or state budgets.
The Committee recommends that a unified Financial Redress Agency (FRA) be created by the Ministry of Finance as a unified agency for customer grievance redress across all financial products and services which will in turn coordinate with the respective regulator.