Private Banks to Play Bigger Role in Rural Banking

by CXOtoday Staff    Aug 25, 2009

Private-sector banks should involve themselves more actively by brining in their expertise in strategic planning and leveraging on information technology for taking banking services to rural areas, RBI has suggested.

A RBI committee, headed by RBI Deputy Governor Usha Thorat, wants private-sector banks to take active role in taking banking services to rural areas and furthering the cause of financial inclusion.

The high-level committee was set up to suggest steps to improve the effectiveness of RBI s Lead Bank Scheme with a focus on financial inclusion and recent developments in the banking sector. The committee submitted its final report to the RBI Governor on August 20, 2009.

In its report, the committee has said the state governments should ensure road and digital connectivity to all centres where penetration by the formal banking system is required.

The other suggestions of the report included:
-  Providing banking services in any form to every village with a population of over 2000 by March 2011. By March 2010, a sub-committee set up for this purpose should come out with a timeframe within which this can be achieved.

-  The Lead District Manager should convene a quarterly public meeting at various locations in the district to generate awareness of the various banking policies and regulations relating to the common man.

-  Every Lead Bank should open a financial literacy and credit counselling centre in each district by following the recent guidelines issued by the RBI.

The RBI committee also recommended the use of IT solutions for disbursal of National Rural Employment Guarantee Act (NREGA) and social security payments and extend support to banks in recovering their dues.