Banks struggle to expand in unbanked, rural areas

Commercial banks and regional rural banks (RRBs) operating in Odisha are struggling to open branches in the unbanked, rural areas.

Till the end of September, these banks have managed to open only 113 branches in this fiscal of which 58 are located in rural unbanked centres and nine in rural banked centres. The progress made by the banks is monitored by the Reserve Bank of India (RBI) on a monthly basis.

The State Level Bankers Committee (SLBC) had advised the banks to open at least 1,000 branches in 2013-14, specifically in unbanked rural centres. The SLBC has urged the banks to intensify efforts to reach the target by March 2014.

Under RBI’s financial inclusion programme (FIP), banks are mandated to offer financial services to the unbanked population and each village is to be covered by a banking outlet.

The banks are required to open a sufficient number of rural branches in such a manner that there is one branch within a distance of 3-4 km to support about 8-10 banking correspondents (BCs).

Under FIP, banks need to adopt a planned and structured approach with the clear objective of providing banking outlets in every village in the next three years through a mix of branches and branch less modes.

Odisha has 47,655 unbanked villages including villages with a population exceeding 2,000 and also those with a population below 2,000. All these villages are to be provided with banking outlets by March 31, 2015.

As per RBI instructions, at least five per cent of these villages should have brick and mortar branches.

According to latest SLBC data, banking services have been provided in all 1,877 unbanked villages in the state with population exceeding 2,000 through brick and mortar branches, ultra small branches, BCs and mobile van banking by June 30, 2012.

However the SLBC has stressed on looking beyond basic banking facilities like a pure savings account, a savings cum overdraft account, recurring or variable deposit account, a remittance product to facilitate electronic benefit transfer and other remittances and entrepreneurial credit at the door step of the customers.

In the remaining villages with population below 2,000, FIP target is expected to be achieved by March 2015.

In this fiscal (as on September 30), the banks have covered 1,870 such villages through 16 brick & mortar branches, 1,644 BCs and 61 ultra-small branches.