South India-based banks have kickstarted the financial inclusion plan as envisaged by the Reserve Bank of India to provide financial services to the rural populations.
Most of these financial institutions are also in the process of appointing business correspondents who will work as financial intermediates between banks and the rural people.
“We have a plan to extend financial services in 212 villages by the end of this fiscal of which we have already covered around 80 per cent of the villages as of now under our financial inclusion plan,” Asit Pal, executive director of Corporation Bank, said.
He, however, said the bank was yet to tie up with any for-profit or not-for profit organisation to act as business correspondents for the public sector lender.
As per the financial inclusion plan, the government plans to cover all villages with a population of over 2,000 to have banking facilities by March 31, 2012. There are about 64,000 such villages in the country lacking a formal banking channel.
Banks will appoint business correspondents in villages who will provide financial services in these areas. In a bid to increase the speed of financial penetration, RBI has recently allowed for-profit organisations to act as BC.\
“We will take a view on appointing corporates as BC after modalities are clear regarding this issue,” Pal said.
Referring to this issue, a top official from Karnataka Bank said, “Karnataka Bank plans to cover 75 villages under the financial inclusion plan in the present fiscal.”
We are in the process of appointing BC for our financial inclusion plan and have already started work towards this, he added.
Recently, in order to increase penetration and promote financial inclusion, the central bank has asked both public and private sector banks to present their financial inclusion plans for the next three years.
Under this plan, banks will open no-frills accounts with service provisions like deposit, withdrawal, remittance payment, loan repayment among others.
However, cheque services will not be provided due to higher administrative charges associated with this particular service.
“These accounts are without the facility of cheques as it will be unsustainable for the account holders to bear the charges of holding a cheque book,” Albert Tauro,”CMD of Vijaya Bank, said.
Vijaya Bank has recently started its financial inclusion plan from Mandya district of Karnataka.
The bank has also tied up with ‘Aadhar’ — the unique identification authority — which will facilitate the financial inclusion process for the bank, he said.
