Banks urged to take steps to ensure 100% financial inclusion

Chairman of the State Level Bankers' Committee (SLBC) Karnataka, Basant Seth, today urged banks to take immediate action to ensure that it could meet the RBI target of ensuring 100% financial inclusion in villages of 2,000 plus population in the state by March 2010.

Addressing the 110th meeting of SLBC today, Seth who is also CMD, Syndicate Bank, said the banks could adopt the RBI's advice of making use of the business correpondent-BF model, as per the guidelines, to extend the banking services.

He also urged the general managers of banks and regional heads of the state to complete the process of verification of data received from the government, with the existing accounts of the bank quickly at apex level, to be able to arrive at the number of families who currently do not have an account.

This was in keeping with the RBI's decision to launch a renewed drive for opening up of no-frills accounts in respect of families who do not have a bank account, on the basis of the data relating to the public distribution system.

He urged banks to operationalise the current no frills accounts by providing a small overdraft of Rs500 to no-frill account holders. RBI had advised that the existing no-frills accounts should be operationalized by giving small overdraft, GCC, remittances/insurance facility, he said.

On performance of the banks, he said as on June 2009, aggregate deposits of scheduled commercial banks stood at Rs2,08,398 crore registering growth of 25.38% compared to Rs1,66,208 crore in June 2008.

Outstanding advances of banks including RRBs as of June 2009 was Rs1,56,759 crore, registering a growth of 18.72%, he added. Under NREGS, now renamed MGREGS, 6435 smart cards had been issued to Social Security Pension beneficiaries in Bellary rural taluk with the amount being paid through business correspondents, Seth said.

As per the RBI proposal to hasten the pace of adoption of the smart card based Electronic Benefit Transfer System, the government has decided to take implementation of EBT scheme under one district one bank model in Chamrajanagar (SBM),
Mandya (Vijaya) and Dharwad (Axis). He asked the participating banks to take immediate action in starting enrolment of job card holders as per the data made available.

On payment of compensation to flood victims, he pointed out there were reports in the media and specifically in Bagalkote district that banks had refused to honour the cheques issued towards compensation by the government.

"I have been informed that stop payments have been issued to the banks in respect of cheques issued by government and consequently the banks have not paid the cheques", he said.

On formulation of scheme for construction of houses to flood victims, he said that the bankers had agreed to finance construction of houses with lower interest of 4% under DRI in respect of eligible cases and at 8% in other cases, taking into account the income criteria.

He urged the banks and government authorities to work in tandem to ensure that appropriate steps are taken to ensure the benefits reach the people.