This refers to Subir Gokarn's column "Demanding to be included" (Muddy Waters, July 14). The "demand side" of financial inclusion is an area that has not received attention. So far, the financial institutions (particularly public sector banks) have viewed financial inclusion merely as an ownership of a financial product, that too only as a liability account (deposit). Most of the deposit accounts opened to achieve financial inclusion targets have become dormant. Banks have perceived financial inclusion only as a social obligation rather than an untapped viable business opportunity.
What are the typical challenges of the "demand side" of financial inclusion? Complex products, lengthy procedures, a lack of credit history and collateral. The real needs of financially-excluded consumers are different from the perceived needs. Bankers' mindsets have become so rigid that they are unable to face a situation of creating an "asset" (loan) that has no credit history and absence of collateral. As a result, the demand and supply side are moving in opposite directions. The current approach of appointing a committee to seek solutions will not help if the management is unable to motivate field-level bankers.
K V Rao Bangalore
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