Financial inclusion brings remote areas on banking platform
By Neelima Shankar
Mar 17, 2010
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The RBI's mission to bring banking to all unbanked areas of the country is deepening its roots all over the country. In order to bring all people residing in remote villages upfront with banking operations, the RBI has started a special drive. RBI, in collaboration of the main bank in the area has decided to expand banking operations by using wireless technology and banking correspondents as tools.

The business correspondent model had been adopted by the RBI in the year 2006 with the objective of bringing banking to all unbanked areas of the country thereby fulfilling its mission of financial inclusion.

Since the cost incurred in the process would be very high, the RBI has decided to bear a part of the total cost. As a part of this drive, banks would be issuing an ATM card to villagers while opening a bank account for them. At the same time, a business correspondent will be appointed who will act as the bank's agent. A hand held device would be provided to the business correspondent which will be connected to the bank through wireless network.

A business correspondent model is one model wherein NBFCs which do not accept public deposits, Non Governmental Organizations (NGOs), Micro Finance Institutions (MFIs) and other organizations of the kind can act as business correspondents and thereby finance the rural community. But the entire process has to take place under banks' vigil. Banks can only authorize those entities as business correspondents who are financially solvent enough for the process.

"After accessing to his account, he can deposit money with the banking correspondent, which can immediately credit the same in his account and give him a receipt. At the same time, if he wants to withdraw money from his account, he can take it from the banking correspondent, after debiting the money from his account on line," said RBI regional director Sandip Ghose.

Ghose also talked about deploying mobile ATMs which will visit every village in the area once a week. It will act as a mobile branch of the bank.

As per RBI deputy governor Subir Gokarn, it is expected that by 2011 every village having a population of 2000 will at least be connected once a week through mobile branch.

Gokarn also said that expansion of banking operations to remote areas will help in curbing fraudulous activities associated with currency and thus enable the appropriate schemes to reach the villagers.

It will also help the villagers avail loans at reasonable rates rather than depending on greedy moneylenders.


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