RBI to use smart card for financial inclusion

The Reserve Bank of India (RBI) is planning to introduce IT-enabled financial inclusion through smart card in Karnataka.

Addressing the State Level Bankers' Committee (SLBC) meeting on Tuesday, Reserve Bank of India's Regional Director Devaki Muthukrishnan said: "The introduction of IT-enabled financial inclusion will facilitate easy payments to beneficiaries under various schemes of the state and central governments such as social security pension schemes and the National Rural Employment Guarantee Scheme (NREGS) which can be directly deposited to their bank accounts."

"A pilot project is to be initiated in Bellary and Chitradurga districts shortly and the entire state will be covered in the subsequent stages," she added.

For implementation of IT-enabled financial inclusion, a sub-committee of the RBI's empowered committee (EC) on regional rural banks (RRB) was constituted.

Muthukrishnan said: "It was decided in the first committee meeting on February 19, 2008, to undertake pilot project and also to choose a technology provider. Eight technology companies have made presentations so far."

Earlier, chairing the SLBC meet, C P Swarnkar, chairman and managing director, Syndicate Bank, said in order to bring the entire state of Karnataka under the 100 per cent financial inclusion programme, banks had taken steps to implement the same in areas covered by Greater Bangalore City Corporation (GBCC).

"In all, 27 lakh no-frills accounts have been opened under the financial inclusion programme and extended the General-purpose Credit Card (GCC) facility to 47,654 persons. Further, as suggested by regional director of RBI, the banks may extend a small overdraft or a GCC with a limit of at least Rs 500 to all no-frills account holders under the financial inclusion progamme," he added.

In keeping with the instructions from RBI, banks have so far taken steps to initiate implementing financial inclusion in urban areas in phases. "In the first phase, GBCC will be covered. As per the information received, 23 banks have completed the survey work and account opening is in progress," said Swarnkar.

Speaking on the occasion, D B Gore, CGM, Nabard, said ,as against a target of promoting 30,000 groups and credit-linking 50,000 groups, the achievement as on February 29 this year stands at 27,000 promoted and 29,000 for credit-linked. The major share of promotion and linkage in the state relate to RRBs and District Central Co-Operative Banks (DCCBs).

"As for the Swarozgar credit cards, in Karnataka, as against the target of 50,000, only 12,666 cards have been issued by all agencies at the end of December 2007. I urge all banks to step up efforts to achieve the targets allotted to them and also request all banks to report the progress of Laghu Udyami credit cards and artisans credit cards in the quarterly progress reports," he added.