RBI's 'outreach programme' from August

The Reserve Bank of India (RBI) plans to launch an outreach programme across the country to evolve a workable model for banking at the village level.

It will start from August this year and all the regional directors have been asked to identify at least 8 villages in their region to be included in the programme.

The aspects relating to the banking development, problems faced in the villages, perception about the banking regulator will be surveyed and monitored by the regional office.

Based on the feedback received from the villages, the RBI will prepare a workable model plan for banking there. The banks, self help groups (SHGs), the local administration and the people in the villages will be involved in the programme, K C Chakrabarty, Deputy Governor, Reserve Bank of India, said.

Chakrabarty, who was here to inaugurate the east zone cultural competition of RBI in Bhubaneswar said, the programme will be launched as part of the platinum jubilee celebration of the bank during 2009-10.

This is based on the idea mooted by the governor of RBI to know why things have not happened in rural areas. All the regional directors have been asked to identify one village in their area each month starting with August. The identification of all eight villages to be included in the programme will be completed by March 2009.

He said, no time frame has been fixed to prepare the banking model for the identified villages. Talks will be held with various stakeholders involved in it. Depending on the outcome, this model may be replicated across the country.

“Banking can not be taken to masses unless technology is leveraged. We want to experiment in the delivery model which is technology based ”, Chakrabarty added. He said, though some commercial banks have started similar initiative to leverage technology, this was not been done in a structured manner.

On the issue of financial inclusion not being very successful in inculcating banking habits among the rural masses, the Deputy Governor said, the delivery model is still evolving.

Many branches in the rural area are not Core Banking Solution (CBS) compliant. In this backdrop, it will take some time to give some guidelines to banks on the process of financial inclusion.

On the demand of the small and medium enterprises (SMEs) for lending 15 percent of the net credit of the banks to this sector, Chakrabarty said, the RBI is not in favour of a target based approach. Instead, the Central Bank is encouraging banks to look at the SME proposals as viable business proposition.

However, forward and backward linkage must be developed along with capacity building by the SMEs.

Regarding the streamlining of operations of the state co-operative banks, he said, involvement of the local people, professional management and measures to reduce the non-performing assets (NPAs) can help in this regard. However, the state governments will have to play a complementary role, he observed.