The BJP Government wants public sector banks to go flat out on the financial inclusion front, asking them to open 20 crore basic savings bank deposit (BSBD) accounts for those at the bottom of the pyramid in the next one year.

Meeting the above mentioned target could prove an uphill task as banks, including public sector and private sector banks, collectively opened just 10.85 crore BSBD accounts in three financial years up to March-end 2013.

According to the timelines drawn up by the Finance Ministry, beginning August 15, public sector banks (PSBs) have ot collectively open 5 crore BSBD accounts up to November-end 2014.

Further, there has to be an incremental addition of 5 crore accounts in each of the time periods ending March 31, 2015, June 30, 2015, and August 14, 2015.

The chief of a PSB said employees of all State-owned banks will have to roll up their sleeves to achieve the financial inclusion targets.

PSBs include 18 nationalised banks, six banks in the State Bank Group and one “other public sector bank”.

The banker quoted above said the Finance Ministry will be closely monitoring banks’ performance on financial inclusion.

While the Finance Minister will take stock of the implementation of the financial inclusion plan once in three months, the Secretary (Financial Services) will do the same every month.

BSBD accounts are accounts that have minimum common facilities such as no minimum balance, deposit and withdrawal of cash at bank branch and ATMs, receipt/ credit of money through electronic payment channels, facility of providing ATM card.

The Reserve Bank of India defines financial inclusion as the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as the weaker sections and low-income groups, in particular, at an affordable cost in a fair and transparent manner by mainstream institutional players.

According to Census 2011, 14.48 crore out of 24.67 households in the country were availing of banking services. What this means is that about 10 crore households (or about 20 crore people) are not availing of any banking facilities.

Two-phased Financial Inclusion Plan

Opening of BSBD accounts is part of a two-phased financial inclusion plan (FIP) that the Finance Ministry has drawn up for banks.

While in the first phase (2014-15), PSBs will be providing BSBD accounts as also universal access to banking facilities, in the second phase (2015-18), among others, they will make micro credit and micro insurance available and offer the Government’s 'Swavalamban' pension scheme to economically disadvantaged sections of the society.

In the second phase, the Government also plans to create a credit guarantee fund to cover defaults in savings-cum-overdraft account and entrepreneurial credit products such as general credit card and kisan credit card.

ramkumar.k@thehindu.co.in

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