The Hindu Business Line : RBI takes banking to the masses

THE Reserve Bank of India has, in its Mid-Term Review of the Credit Policy, initiated a number of customer-oriented measures towards the financial inclusion of the weaker sections.

The central bank has urged all banks to make available basic banking `no frill' accounts either with `nil' or very low minimum balances as well as charges that would make such accounts accessible to vast sectionsof the population. In addition, the RBI will provide banks a simplified procedure for people of low-income groups opening accounts, against the background of the "Know Your Customer" (KYC) norms.

A number of private banks currently require account holders to maintain Rs 5,000 as minimum balance in their savings accounts. Mr Shyamal Saxena, Head, Liability retail business, HDFC Bank, said that while a person in the metro would be required to have a minimum balance of Rs 5,000 to open a savings account, HDFC Bank had reduced this requirement to Rs 2,500 in the case of its branches in the semi-urban and rural areas. "We provide the same range of services to our customers in the semi-urban and rural areas," he said.

According to bankers, the RBI had issued a revised master circular asking banks to offer `no frill' accounts and many banks have already started complying.

In the revised guidelines on KYC principles, the central bank has said that persons belonging to the low-income groups should not be denied banking services due to their inability to produce documents to establish their identity and address. Mr Varghese Thambi, Head, Retail banking, IndusInd Bank, said that these customer-oriented measures would ensure that banks do not refuse services to the needy on technical grounds.

IndusInd Bank offers zero balance current accounts and a minimum balance of Rs 11 in the case of children's savings accounts.

The RBI has also decided to accord general permission to banks to issue debit cards in tie-up with non-bank entities subject to certain conditions.

According to Mr Thambi, the permission would help customers avail of more benefits through co-branded debit cards. "We will now see more tie-ups with merchant establishments, hotels and so on," he said.

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