RBI begins review of Jan Dhan rollout

A week after the official launch of the Prime Minister's Jan Dhan Yojana, the Reserve Bank of India has begun a review of the financial inclusion mission.

A senior RBI official said the regulator was focusing on performance of banks' statewise and in each district. The ambit will also cover the system's readiness to track the work of business correspondents (BCs), a key link between bank and those being covered by the programme.

"Besides doing checks, the effort is to find out challenges and hitches being faced by bankers. This is not a fault finding exercise. The aim is to take feedback and attempt to provide timely support, as the targets are stiff," the official said.

At the apex, a panel comprising the finance minister, RBI governor and finance ministry heads will take stock of the progress.

Initially, banks were given a target to open 75 million accounts by the middle of August 2015, of those who did not have access to financial services. The date was advanced to January 26, 2015, by Prime Minister Narendra Modi on the launch date (August 28), after banks had opened about 15 million accounts.

The RBI official said access to banking services was key but not sufficient for meaningful financial inclusion. The active use and proper handling of accounts was as important, as beneficiaries have to frequently conduct transactions. The review would also cover the work being done for financial literacy, he said.

Much of the work for this mission is being outsourced to BCs. Hence, banks have an extra responsibility to provide these support and ensuring integrity of operations. There are reputation risks involved.

Last week, RBI executive director Deepali Pant Joshi had said there were many challenges in implementing the BC model. Sustainability and scalability were essential.

More and more innovative products will have to be introduced, to benefit both banks and rural clients, while making the BC model more viable, she'd said.

The priority is to streamline the Direct Benefits Transfer programme to work efficiently through electronic channels. The government should accelerate seeding of bank accounts under one agency, instead of leaving line ministries to handle the implementation of individual schemes, she'd suggested.