RBI reports state loopholes in banks’ claiming on financial inclusion

As per the Reserve Bank of India (RBI) banks under the guidance of state-level bankers committees (SLBCs) had declared several districts in the country as 100 per cent financially included, but in actual financial inclusion has not been extended to all the districts.

RBI report stated that most of the accounts which have been opened as part of the financial inclusion drive are still inoperative because of various reasons such as distance from the branch, illiteracy, lack of interest and non-availability of passbooks. The RBI added, “There is a need for SLBC/DCCs to actively step up the awareness with regard to no-frills accounts as this continues to be poor in many districts”.

The RBI remarked, “Although the SLBCs have declared several districts as 100 per cent financially included, the actual financial inclusion has not been to that extent”. While in the RBI’s Annual Policy Statement for the year 2007-08 it was announced that an assessment of the progress will be done of the districts where 100 per cent financial inclusion would be taken up by independent external agencies. Therefore, studies were carried out in 26 districts in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Orissa, Punjab, Rajasthan and West Bengal. Giving examples, the RBI said, in the Ganjam district, Orissa, about 65 per cent keen of having banking facilities have been provided with such facilities. The RBI notified, “However, no bank branch has extended overdraft or general credit card to any no-frills account holder. There were hardly any transactions in more than three-fourth accounts opened under the no-frills account category”. But the villagers felt it is very difficult to complete transactions within a reasonable time and officials were unwilling to sanction credit facilities for their basic needs. It stated therefore villagers preferred to approach informal sources for quick credit.

According to records in Rajsamand district, Rajasthan, 92.27 per cent households in villages have a bank account. Though 52.39 per cent people had no transactions in their bank accounts due to distance of the branch (79.64 per cent), illiteracy (6.60 per cent) and not being interested (10.04 per cent). Whereas in towns, 98 per cent households had a bank account and 86.94 per cent carried out transactions in the accounts. As per records in towns, those who did not carry out transactions pointed toward non-availability of passbook (75.47 per cent) as the major reason. While in Srikakulam district in Andhra Pradesh, about 71 per cent of all those wishing for of having banking facilities had been provided with accounts. But there are no reports of providing KCC, OD (over draft) or GCC (general credit card) facilities to the no-frill account holders.