Banks seek capital subsidy for financial inclusion

Banks have sought capital subsidy and other incentives from the Uttarakhand government to complete the financial inclusion process in the hill state where most of the villages are situated in remote areas.

At a meeting held in New Delhi as an initiative of the Reserve Bank of India (RBI), the banks’ officials were of the view that since providing banking facilities in far-flung villages affected profitability of the banks, the government must provide some incentives to the banks. Representatives from 12 banks participated in the meeting.

Under the financial inclusion programme, a total of 475 villages have to be provided with banking facilities through branches or business correspondents (BCs).

Banks also said the process of financial inclusion in 259 unbanked villages under the Atal Gram Yojana will not be met by March 31 deadline due to various problems being faced by the banks in the hilly areas like poor connectivity. The broadband connectivity in most of the villages was lacking due to which new branches or other banking facilities cannot be provided even through BCs, they asserted.

According to the RBI guidelines, villages with population above 2,000 have to be included in the financial inclusion process. But under the Atal Gram Yojna, most of the villages have less than 2,000 population. “We have set up a sub-committee under the State Finance Secretary. This committee will organise a meeting to look into the various demands of banks in this regard,” said Principal Secretary (Finance) Alok Jain.

The meeting was convened in New Delhi so that the top officials of all the banks can participate. However, State Bank of India (SBI) said it has already appointed its BCs and would try to complete the financial inclusion at the earliest. “We have appointed two BCs – Zero Mass and Ajivika – for the financial inclusion programme in the state,” said S P Kalara, area general manager, SBI.

However, other banks like Punjab National Bank are yet to appoint their BCs.