Panel to pen ways to spread financial system

The Union government has decided to set up a panel to suggest steps for bringing more people under the financial system. At present only 49 per cent of the population have access to credit and banking services.

Addressing a gathering after inaugurating the 501st core banking solution branch of Indian Bank here on Friday, Finance Minister P Chidambaram said: "Ours is a middle income group country with a sound economic growth rate. The fact that half of the nation's population does not have access to credit is something unacceptable. Therefore, we will set up a panel to examine the hurdles faced by people in accessing credit."

Chidambaram pointed out that only 27 per cent of agrarian households had access to credit. Similarly, 27 per cent of the nation's population were covered by the banks while another 22 per cent depended on private money lenders and the non-banking financial sector.

"The remaining 51 per cent is deprived of all kinds of credit and banking facilities. The same holds good for an urban set-up," the finance minister observed.

He was of the opinion that banks could concentrate more on self help groups (SHG) sector to improve financial intrusion.

"One of the UPA government's achievements is assisting the growth of credit-linked SHGs. When the UPA came to power, there were 10.70 lakh SHGs. By the end of February this year, another 3.25 lakh SHGs have been added. Karnataka, Tamil Nadu and Andhra Pradesh have led the way while Orissa, West Bengal and Bihar are now gathering momentum in SHG activity. There is an opportunity waiting for the banks. Please capitalise on them," Chidambaram said. He commended the Indian Bank for launching the "Pondicherry Initiative".

"I am happy to learn than the bank has covered all villages in Pondicherry where every household has a bank account. It is a no-frill account that will instill the habit of banking and savings among villagers," the FM said.