RBI Governor Raghuram Rajan's strategy of widening and deepening the banking system through payment banks, India Post Bank, small finance banks and strengthening the NBFCs through appropriate regulation and facilitation deserves rich commendation for taking inclusive banking closer. But doubts still prevail over the effective reach of inclusive banking going by the laggard performance of the priority sector credit thus far.
I am in politics for over 35 years. Since early days we have been talking about poverty alleviation. "Garibi Hatao" (remove poverty) slogan was given in early 1970s. Since then a number of schemes have been introduced aimed at removing poverty. I am not saying that nothing has happened. But surely the pace has not been good.
The Merriam Webster Dictionary defines poverty as "the state of one who lacks a usual or socially acceptable amount of money or material possessions." However, poverty is not simply characterised by a lack of adequate income. It has far reaching implications.
In its guidelines for licensing of payments banks, the Reserve Bank of India (RBI) said the move is intended to "further financial inclusion", which is among the top priorities of Narendra Modi government. The government has set a target to open 100 million new accounts under Pradhan Mantri Jan Dhan Yojana by 26th January 2015. The scheme was launched on 28th August 2014.
The new government has started an ambitious financial inclusion plan that aims to bring every household under the banking net by 26th January 2015. Financial inclusion has been a buzzword for quite some time.
The Prime Minister's clarion call to make the Indian textiles the biggest employer in the manufacturing sector and the second largest employer in the country after agriculture is all set to streamline the prospects of social and economic inclusion.
The Indian banking is undergoing through some unusual structural changes and naturally the news has been making round about one of those, which is 'differentiated banks'. As widely reported and circulated, the RBI Governor Raghuram Rajan is a firm believer in the ideas behind it, and thus the central bank's guidelines come so hands-on this, it leaves no chance unturned to make the keen watcher believe, these new institutions will end all ill in existing system at place.
The benefits of RuPay Debit cards, insurance and overdraft facilities associated with accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) will also be applicable for Cooperative Banks accounts opened under the scheme, according to top Finance Ministry officials.