Friday, August 1, 2014

PSU banks to play a key role in government's financial inclusion campaign

Finance minister presiding over the meeting of PSU banks' CEOs.
PRESIDING over his first meeting with the heads of the public sector banks, finance minister Arun Jaitley affirmed that Prime Minister Narendra Modi will launch the government's campaign for financial inclusion. This aims at ensuring that 7.5 crore households that do not have access to banking have at least two accounts and obviously the PSU banks to play a key role in the mission.
Jaitley said that the government is going to launch a new ....
programme of financial inclusion in mission mode which will provide households with facilities of savings, credit, remittances, insurance and pension among others, said a ministry statement. He said that this is a marked shift from earlier effort where only opening of account was the focus of the financial inclusion drive.
Government will also emphasise to introduce mobile banking on all kinds of phones, the finance minister told reporters after the meeting on July 31 in New Delhi.
"The intention is, in a mission mode, to have a formal campaign which will be announced by the Prime Minister and then throughout the country to have a campaign for inclusion. This campaign for inclusion will be at various layers," said the finance minister, who is also taking care of the defence ministry.
Dwelling upon the concept, Jaitley said that in some areas where branches are possible, the regular brick and mortar branches will be created. "Where it is not possible, there smaller branches manned by one or two people would be created".
The Finance Minister Shri Jaitley further said that this time the Government is targeting the individual households rather than the village. He said that there are 7.5 crore households in the country who do not have bank account so far. The Finance Minister said that the Government is targeting that every village should get a banking facility within a reasonable distance and that every household should have at least one bank account within the time frame of one year. This is a big challenge and there are several difficulties like lack of connectivity and infrastructure facilities etc, the Minister added.
The finance minister said that in our country where we have very low levels of financial literacy, it is essential that people understand the importance of availing financial services which will enable them to participate in the growth story. Therefore, financial literacy will receive a special emphasis in this new programme of financial inclusion, the minister added.
Jaitley said that technology has made rapid strides in recent times and, therefore, the Government must use technology, especially mobile based services in a big way to achieve the desired results. The Government has integrated provisions of access to banking facilities, account opening, financial literacy, credit availment, micro insurance and pension, the Minister added.
"The objective is to reach every household possible and have at least two account holders in every house. At present, financial inclusion and the reach of the banking systems extends to about 58-59 percent and so the dark areas which are not covered these include about 7.5 crore households," he said.
Jaitley, during the meeting, also discussed the possibility of exploring and expanding mobile telephony banking. Currently, it can be made available on smartphones, and effort is to extend it to all phones.
"In the course of next two years, we hope to make a considerable headway. The unit for contact is not a village, it is a person And therefore it is a higher level of ambition which we are trying to reach," the Minister said.
The Financial Inclusion Mission has two phases starting from August 15 this year. The first phase will get over by August 14, 2015 and the second phase by August 14, 2018. Most of the activities will be done in Phase – I and insurance and pension would be covered in Phase – II.
The meeting was attended among others by G.S. Sandhu, secretary, department of financial services, deputy governor, Reserve Bank of India, Ms. Snehlata Shrivastva, additional secretary, department of financial services, chief executive officers (CEOs) of public sector banks and financial institutions and senior officers of ministry of finance.

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