Pvt banks may be brought under financial inclusion

Private sector banks in Odisha may be brought under the ambit of financial inclusion programme, an initiative of the Reserve Bank of India (RBI) so far assigned only to public sector lenders.

RBI-Bhubaneswar has asked State Level Bankers' Committee (SLBC) to prepare a revised roadmap for financial inclusion urging the committee to consider private sector banks for allocation of some villages even though that do not have any service area allocation at present. The Central bank has urged SLBC to complete the recast roadmap exercise by March 31, 2013.

Unbanked villages scheduled to be covered beyond 2015 will now have to be covered by March 2013. Besides, as per RBI's instructions, banking services proposed to be provided through other modes like mobile van banking need to be clearly defined with detailed break up.

RBI has urged the controlling heads of banks to bestow their personal attention for allocation of villages as well as provision of banking services in these villages. They have also been asked to ensure that fresh opening of adequate number of brick and mortar branches in these un-banked villages are factored in their annual branch expansion plan submitted by the bank's head office to RBI.

The brick & mortar structure is essential to support a cluster of eight to 10 banking correspondents within a reasonable distance of three to four km. To ensure this, RBI feels that there is a need to have an intermediate brick and mortar structure between the base branches and banking correspondent (BC) locations in at least five per cent of the total villages with population below 2000.

RBI observed that the distribution of villages providing banking services between 2012-15 is skewed towards BCs and the ratio of branch to BC is very low. Consolidated position for the three-year period reveals that the banks have projected to provide banking services through BC mode (67.2 per cent), other modes (32 per cent) and brick & mortar branches (0.8 per cent). The Central bank has held that such a low projection of brick & mortar branches is not acceptable.

Figures also show that the banks have resorted to back loading while projecting the plans of providing banking services to the villages. According to plan projections, banks aim to cover six per cent, 17 per cent, 25 per cent and 52 per cent of the villages in 2013, 2014, 2015 and beyond 2015 respectively. This shows that the banks have pushed more than half of the villages beyond April 2015 for the purpose of financial inclusion which is not satisfactory, feels RBI.

As per instructions issued by the department of financial services under Union finance ministry, brick & mortar bank branches are to be opened in all villages across the country with a population exceeding 5000. The finance ministry further clarified that in cases where brick & mortar branches are not viable, banks may set up an ultra small branch (USB).