The Hindu Business Line : RBI pilot project on financial inclusion in Pondy

Sources said that Pondicherry was regarded to be an ideal place to begin a pilot project for financial inclusion for many reasons. It has a population of about 10 lakh, of which about 3-4 lakh are using banking facilities. The task, then, is to get another 3-4 lakh people into banking.

Pondicherry also qualifies on other parameters such as literacy and infrastructure. The concept of achieving a greater financial inclusion has been gaining currency in the recent past, especially after Dr Reddy spoke about it in his Mid-term Review of Annual Policy Statement for 2005-06 on October 25. "With a view to achieving greater financial inclusion, all banks need to make available a basic banking `no frills' account either with `nil' or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population. The nature and number of transactions in such accounts could be restricted, but made known to the customer in advance in a transparent manner," he had said.

RBI has also asked banks to report to it every quarter the number of such no-frills accounts opened.

In today's meeting in Pondicherry, held after a discussion with the Union Territory's Chief Minister, Mr N. Rangasamy, the RBI chief is said to have called upon banks to come up with proposals to build processes for getting more and more people into the banking system.

RBI is evolving guidelines meant to serve the objective of greater financial inclusion. These guidelines will make it easier for even less educated persons to use the services of a bank. For example, the `know your customer' guidelines are to be relaxed to the extent that to open the `no frills' account, a photo identity card is sufficient.

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