Letters: Better banking

This refers to the editorial "The cost of safety nets" (May 11). Despite making huge efforts, there is still a danger that the banking system might serve only the accessible urban and surrounding pockets, while those in far-flung areas might remain devoid of the benefits of these safety nets.

Apart from Narendra Modi's public commitment in Kolkata to open more bank branches in West Bengal in particular and eastern India in general, the government needs to identify the causes that have hindered the banking sector's growth over the last 60 years in these areas. One reason can be that in the low economic activity villages, full-fledged bank branches might be unviable and need huge subsidisation along with basic infrastructure, which is generally poor. Bandhan Bank might hopefully fill this gap to some extent. The government's withdrawal of capital subsidy in around 62 terror-affected districts for setting up of ultra-small branches could further slow down bank expansion in the most needy areas.

The prime minister must now turn his attention in making the business correspondent (BC)/bank mitra model stable, visible, functional and permanent up to the farthest villages, if his dreams for these safety schemes to reach millions of Indians are to succeed. The government must improve its record in making the promised payments to banks for various services rendered in direct benefits transfers. A reliable BC network and a pan-India credible road map to open bank branches are two areas that need urgent government attention.

Y P Issar Karnal

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