State lags in implementing financial inclusion plan
Commercial banks in Karnataka have been advised to speed up the efforts to achieve financial inclusion by the end of the present financial year. Presently, the banks in the state are lagging in meeting the deadline of March 2012 fixed by the Reserve Bank of India (RBI).
The slow pace in meeting the financial inclusion deadline is mainly on account of the delays in selecting the technology provider and absence of core banking system amongst the regional rural banks (RRBs). As of December 2010, Karnataka-based banks stood only behind Uttar Pradesh in implementing financial inclusion programme.
As against the target of achieving financial inclusion in 3,395 villages with a population of over 2,000 by the end of fiscal 2011-12, the banking sector in the state has been able to provide banking services to 1,571 villages, which is 46 per cent of the target, by March 2011. The financial inclusion programme was launched on April 1, 2010.
The RBI had asked banks in Karnataka to complete the first phase of the financial inclusion by the end of March 2012 with an intermediate target of March, 2011. However, as of March this year, the banks have met less than half the target, according to data available with the State Level Bankers’ Committee (SLBC).
The selection of technology provider through a detailed tendering process is said to have delayed the implementation. The banks had to select a technology and hardware provider based on the guidelines of the Institute for Development and Research in Banking Technology (IDRBT). “The main problem was integration of handheld machines with the servers of respective banks in a secured manner and this took long time,” banking sources said.
The ministry of finance had asked the SLBC to furnish a roadmap for extending banking facilities to all villages with a population of over 2,000 and furnish district wise, block wise and branch wise details. It also advised banks to indicate the time schedule for providing banking facilities for a period of two years from 2010-11 and 2011-12. Subsequently, the banks provided their respective boards approved plans indicating that they would meet the target by March 2012.
“The target is achievable by March 2012. However, some banks like RRBs had a huge target ahead of them as most RRBs were not fully-equipped with core banking solutions and technology to implement the programme,” banking sources said.
Basant Seth, chairman of Syndicate Bank and convenor of SLBC, has advised banks in Karnataka to implement the roadmap for providing banking services in their respective villages by March 2012. “While we appreciate the efforts of the bankers in Karnataka for their good performance, banks are requested to provide banking services in the remaining 1,804 villages at the earliest,” he said.
Meanwhile, the banks in Karnataka have also prepared the list of unbanked villages with population of less than 1,000 for implementating the financial inclusion plan simultaneously. There are 6,383 villages with a population of 1,000 to 2,000 based on the data obtained from the government of Karnataka.
Of these, 297 villages already have banking services, 24 villages are now within the urban area and 33 villages could not be identified. About 6,029 villages have been identified as unbanked.