RBI changes Financial inclusion definition

The Reserve Bank of India (RBI) today said that financial inclusion is not restricted merely to opening of bank accounts and should imply provision of all financial services like credit, remittance and overdraft facilities for the rural poor.

“The accounts must be operational to provide benefits beyond deposit of money like availability of credit, remittance facility and overdraft among others”, D Subbarao, Governor of RBI said here.

“I have already requested to the commercial banks in this regard and going to pursue with them”, Subbarao said.

Talking to the media after meeting the Orissa chief minister, Naveen Patnaik in the state secretariat, he said, a pilot project for financial inclusion has been launched in Karnataka.

Though RBI is trying to push the pilot project across the country, it favours learning through intensive experiment in Karnataka. The bank is encouraging all the states to take the financial inclusion process forward.

Referring to his discussion with the chief minister, Subbarao said, he had urged the state government to include financial literacy in the curriculum of schools and colleges in the state. The chief minister has assured to take this proposal forward.

Asked whether the RBI intends to intervene for controlling inflation when the food inflation has reached 17.47 per cent, fuelled by rise in the prices of potato, onions and other essential items, the Governor refused to comment.

He also refused to forecast the growth rate of Gross Domestic Product (GDP) for the third quarter stating that the RBI will revisit the subject in its January policy.

Sources said, the state government made a presentation before the RBI Governor on the progress of banking in the state. It was pointed out that the per capita bank credit in Orissa is Rs 11,381 compared to Rs 27,824 for the nation as a whole.

This compares very unfavourably with state like Maharastra (Rs 94,300), Andhra Pradesh (Rs 28,018) and Punjab (Rs 32,774).

Declining credit-deposit (CD) ratio, identification of un-banked areas, opening of bank branches in those areas, inadequate flow of credit to agriculture, MSMEs, handicrafts and handloom sectors were cited as areas of concern. “During the discussion with the RBI Governor we sought more loans for farmers, agriculture, small scale industries and branches in rural areas so that people can take benefit out of various state and Central government schemes”, Patnaik told the media.