Nachiket Mor, head of the panel whose recent report on getting each citizen a bank account by January 2016 has stirred debate, says it’s feasible to aim because of the Aadhaar card issue schedule.
“We want to piggy back on Aadhaar for opening bank accounts,” he said at a press conference here. Discussions with the Unique Identification Authority of India (UIDAI) indicates the December 2015 deadline of providing an Aadhaar card to every citizen will be meet, he said.
Added Mor, a central board member of the Reserve Bank of India (RBI) and chairman of the committee on comprehensive financial services to small business and low income households: “The target is dependent on our perception on what is happening to Aadhaar. The bank account target is really an electronic target. So, opening of the account by January 2016 is not a big task. You can argue that Aadhaar could be delayed but the indication we got from discussions with UIDAI and with Nilekani (Nandan Nilekani, chairman, UIDAI), it looks quite good.”
Two of the 13-member Mor panel — Shikha Sharma, managing director and chief executive officer of Axis Bank, and S S Mundra, chairman and managing director, Bank of Baroda — went on record with their apprehensions on achieving some of the deadlines. They said one could aspire for the 2016 deadline but 2018 seemed more realistic.
Mor said he was happy the two felt the report was “too tight”, saying it enhanced its credibility. “When the committee was formed, of mostly bankers who’d spent 20 years in the trench, the apprehension was that it will be a soft report. There was a concern that suppliers will go easy on this...With two of our members finding the report too tight, (it) in a way, increased the credibility,” he said. Mor emphasised his initial objective was to open a bank account for everyone; many might remain dormant.
Some bankers, like former State Bank of India chairman Pratip Chaudhuri, had argued the Mor committee suggestions would become reality till the time banks asked for minimum balances in savings accounts and levied account maintenance charges.
On the issue of banks deciding on charges that could be levied on customers, Mor said a customer was willing to pay if a bank provided a service. “It is better to provide a service and charge for it, rather than providing no service,” Mor said.
During the interaction, Mor highlighted five pillars on which the committee based its views.
“First, leverage the Aadhaar process. Second, we have done very good experiments with two strategies -- the business correspondent and pre-paid instrument issuers. We proposed to strengthen these two,” he said.
He also explained the rationale for setting up new types of banks but said they were mere extensions of what the system already had. The committee proposed creation of payment banks and wholesale banks. “The idea is not to create new institutions from the blue sky. We already have pre-paid instrument issuers; is it possible to think of them as mini banks? We already have NBFCs (non-bank finance companies); it is possible to see them as a particular type of bank. S,o we have coined two terms, payment bank and wholesale banks. You can call it re-labelling or progression. Eventually, these institutions might grow to become a full service bank,” he said.
The other two pillars are allowing banks to specialise on different sectors of priority lending, and customer protection.
“In terms of customer protection, what we said is, currently, the approach is almost exclusively focussed on literacy and transparency. We are saying to add what we have called suitability,” he said.