New Delhi, Apr 2 (KNN) Expressing disappointment over the poor quality of financial spread, despite Kissan credit cards and general credit cards, RBI Deputy Governor, K C Chakrabarty has said that banks have been advised to provide in-built overdrafts to basic saving account holders so that they can be saved from the clutches of money lenders in emergency situations.

The entrepreneurial credit has also been simplified in the form of KCC for farm sector household and GCC for non-farm sector households, he said earlier this week while addressing the 5th SKOCH Summit in the national capital. 

Speaking about financial inclusion, Chakrabarty said, “Banks have been advised to make available Basic Savings Bank Deposit Accounts (BSBDAs) for all individuals with zero minimum balance and facility of ATM card/ Debit card.

“Existing impediments of minimum balance maintenance, bank charges, etc. are being addressed through the same. With this it has become a right for every eligible Indian citizen to open basic savings account with banks.”

Generating sustainable economic growth through increased financial inclusion has, of late, become the central mantra of the regulators and policy makers, not only in India, but across the globe, he said adding, “But, how far have we succeeded in our efforts? Undoubtedly, over the last five-six years, ever since RBI has encouraged the banks to adopt a structured approach for financial inclusion, the banking sector has done a good job.”

“One can see the statistics related to number of basic bank accounts opened, number of Kisan credit cards (KCCs) and General credit cards(GCCs) issued, etc. These numbers are by no means small. But, if you ask me whether we are satisfied with the progress, the answer would be an unqualified ‘NO’,” he said.

We are not happy with the quality of Financial Inclusion that we have achieved over these years...The larger question, therefore, is what is holding us back? Why are the banks not able to bring in meaningful financial inclusion? To my mind, a fair share of the collective failure of the stakeholders can be attributed to poor governance of our Financial Inclusion framework and lack of accountability at the highest policy level i.e. Board and at the level of senior management, Chakrabarty said.

RBI Deputy Governor further said a large number of people were still outside the ambit of banking services.

The focus should not only be on opening accounts but also ensuring proper transactions.

While over 150 million accounts were opened, only 30 million transactions have taken place up to December 2012. The “extremely low” number of transactions per account opened under financial inclusion is adversely impacting the viability of the financial inclusion efforts and would ultimately result in stakeholders losing interest in the exercise.
“Banks need to identify the causes for the low transaction rates and urgently address them in order to be successful, sustainable and scalable,’’ the Deputy Governor said. (KNN/SD)