The Hindu Business Line : Mass banking with no frills is win-win for both, says Leeladhar

Mr V. Leeladhar, Deputy Governor, Reserve Bank of India, delivers the 8th Hormis Memorial Lecture organised by the Fedbank Hormis Memorial Foundation in Kochi on Friday . - - H. Vibhu

Kochi , Dec. 2

IN order to ensure greater financial inclusion of all sections of the population, especially the under privileged sections of society, Mr V Leeladhar, Deputy Governor of the Reserve Bank of India, has exhorted more banks to come forward and offer `no frills accounts' and provide wide-reaching access to banking services.

Delivering the Hormis Memorial Lecture, named after the founder of the Federal Bank, he said when bankers did not give the desired attention to certain areas, regulators would have to step in and remedy the situation. This was the reason why the Reserve Bank of India had been placing a lot of emphasis on the financial inclusion of all sections of society.

In India, the focus of financial inclusion at present was confined to ensuring a bare minimum access to a deposit account. But as a country gets more and more developed, this by itself is no sign of financial inclusion. Greater segments of the population should have access to banking services which would offer them a whole bouquet of facilities.

Citing the case of Britain, he said that the Financial Inclusion Task Force in the UK had identified three priority areas for the purpose of financial inclusion - - access to banking, access to affordable credit and access to free face-to-face money advice. The UK has established a Financial Inclusion Fund to promote financial inclusion.

In countries such as Britain and the US, banks have introduced no-frills accounts with low minimum deposits to ensure financial inclusion of larger sections of the society.

In India too, banks should come out of feeling that a very aggressive competition policy and social inclusion are mutually exclusive. As demonstrated elsewhere in the world, mass banking with no-frills can become a win-win situation for both.

It was becoming increasingly apparent that addressing financial exclusion wouldrequire a holistic approach on the part of the banks in creating awareness about financial products, education, and advice on money management, debt-counselling, savings and affordable credit.

Banks would have to evolve specific strategies to expand the reach out their services.

At the function organised by Federal Bank, the biography of the late K P Hormis, written by Mr K.P. Joseph, former consultant with FAO, was also released.

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