The Hindu Business Line : No support for no-frills accounts, say bankers

Chennai, Dec. 19 Over 95 per cent of the no-frills account with banks are dormant because the banks do not take the effort to make customers operate these accounts, say bankers.

The Reserve Bank of India urges banks to open no-frills accounts but only tracks the number of accounts opened without seeing how many of them are dormant, said a banker during the Banker’s Financial Inclusion Conference- Horizon 2008.

Mr Suriender Kumar, General Manager, State Bank of India, told Business Line, “It is easy to open no-frills accounts but if these customers have to deposit Rs 10, they will have to spend Rs 20 to reach the bank so it makes it unaffordable to have regular banking transactions.”

Smartcard reach

This is where companies like the Financial Information Network and Operations Ltd (Fino), which had organised the conference, help. They reach out to the under-privileged customers at their door step, he said. Fino is promoted by public sector banks, private equities and international investors.

With the help of a bio-metric–enabled smartcard, to identify each individual transacting with the bank, Fino has so far reached about three million people.

Fino is partnering with about 10 banks and three-four insurance companies. The banks include State bank of India, ICICI Bank, Axis Bank, Union Bank of India and Corporation Bank.

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