The Hindu Business Line : ‘Use biz correspondent model for effective financial inclusion’

New address: Dr C. Rangarajan, Chairman of the Economic Advisory Council to PM, flanked by Prof K.M. Kaveriappa, Vice-Chancellor of Mangalore University, and Mr B. Sambamurthy, Corporation Bank, CMD, at a meeting in Mangalore on Friday. —

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Mangalore, Aug. 10 The model of business facilitator and business correspondent, which has high potential, should be effectively used for the implementation of financial inclusion, according to Dr C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister.

Delivering a special lecture on ‘Financial inclusion: Some key issues’, organised by the Corporation Bank Chair in Bank Management at Mangalore University here on Friday, Dr Rangarajan said that banks must take the initiative to remove the obstacles that come in the way of an extended use of facilitators and correspondents.

At present, rules permit institutions and certain category of individuals to function as business facilitators.

This list can be further expanded to include other people. Individuals who have served as bank facilitators and have shown to have a satisfactory record may also be used as business correspondents, he said.

To make the banking services available to everyone, technology has to be leveraged to create channels beyond branch network to reach the un-banked all over the country.

“Technology has to enable the branch to go to the customer instead of the other way round,” he said.

On making rural branches more effective in credit delivery system, he said rural lending requires a specific type of organisational ethos, culture and attitude. Rural branches of banks have to be farmer-friendly.

He suggested that at least one branch of the lead bank at the block or taluk level can be designated as a nodal branch to address the issue of exclusion.

These branches must be strengthened with technical staff for provision of developmental services in the farm and non-farm sectors. All banks could make use of the advice provided by such branches.

Stressing the need for the simplification of the procedures in relation to granting of loans to small borrowers, he said ‘Saral-type’ of document for the grant of small loans must be evolved.

Strengthening of the regional rural banks (RRBs) could be one major policy intervention for promoting greater financial inclusion. The operations of RRBs could be expanded to 80 hitherto uncovered districts, he said.

Dr Rangarajan, who heads the Committee on Financial Inclusion, said the interim report of the committee has sought to address some of the issues for improving the delivery system.

“There is need for an attitudinal change, there is need for a change in organisational structure and there is need for innovative models of delivery at the doorstep. Financial inclusion is no longer an option, it is a compulsion,” Dr Rangarajan added.