'Women, small farmers should be brought under financial inclusion'

A deposit scheme for the girl child, linking of Aadhaar card to each individual credit account, and development of solutions based on mobile banking technology are some of the recommendations of an RBI panel to increase financial inclusion.

The Reserve Bank of India (RBI) on Monday released the report of the Committee on Medium-term Path on Financial Inclusion.

The financial inclusion initiative envisaged by the committee is much broader in scope, going beyond the traditional domain of the RBI, the bank said in a statement.

"The committee recognised that substantial progress has been made in terms of access of financial products and services especially after the launch of the Jan Dhan Yojana.

"However, there were significant gaps in terms of usage, inadequate 'last mile' service delivery, and exclusion of women as well as small and marginal farmers and very low formal link for micro and small enterprises," the RBI said.

The committee said banks have to make special efforts to step up account opening for females, and the government may consider a deposit scheme for the girl child -- Sukanya Shiksha -- as a welfare measure.

Given the predominance of individual account holdings (94 percent of total credit accounts), a unique biometric identifier such as Aadhaar should be linked to each individual credit account and the information shared with credit information companies to enhance the stability of the credit system and improve access, the committee said.

To improve 'last mile' service delivery and to translate financial access into enhanced convenience and usage, a low-cost solution should be developed by utilisation of the mobile banking facility for maximum possible government to person (G2P) payments.

Referring to the distortion in the agricultural credit system caused by the agricultural interest subvention scheme the committee recommended a technology aided universal crop insurance for marginal and small farmers with a monetary ceiling of Rs.200,000 at a nominal premium.

The other major recommendations are:

(a) Introduction of a system of unique identification for all MSME borrowers and sharing of such information with credit bureaus

(b) Establishing a system of professional credit intermediaries/advisors for MSMEs to help both the sector banks in credit assessment

(c) Commercial banks may be enabled to open specialised interest-free windows with simple products like demand deposits, agency and participation certificates on the liability side and cost-plus financing and deferred payment, deferred delivery contracts on the asset side

(d) Corporates should be encouraged to nurture self help groups as part of their Corporate Social Responsibility (CSR) initiatives

(e) Provision of credit history of all SHG members by linking with individual Aadhaar numbers to check over-indebtedness

(f) To restore tax-exempt status for securitisation vehicles for efficient risk transfer.