‘We need more specialised banks’

Nachiket Mor, Chairman of the RBI’s committee on financial inclusion, has strongly defended the need to have specialised banks compared to new full service banks.

He said the idea of financial inclusion will be better served in the medium term if specialised banks like the payments only bank and lending only banks are allowed to flourish.

Mor said his committee’s recommendations are building on what is already happening in the financial inclusion space in the country.

While conceding that new banks and large banks are of course required to solve the problem of financial exclusion quickly, Mor said existing payment providers and business correspondents should be given more freedom.

Mor, who is also a director on the RBI’s central board, said that non-banking financial companies (NBFCs) have a very important role to play in financial inclusion.

Role of NBFCs “Despite the public perception that NBFCs are poorly governed, the fact is that their cost structure is much more superior to that of banks...Even their NPAs are so low compared to banks even in the same geographies that both operate in,” he added.

He said that while drafting the report, they came across instances where some cooperative banks were very poor lenders but had huge customer deposits. He asked, “why not make such banks more sharply focussed on collecting deposits and making payments when it is obvious that they cannot do both?”

He said that banks should also be allowed to open accounts on the basis of know-your-customer verification done by mobile companies, if such companies or their subsidiaries are allowed to become a payments bank.

Mobile users There are approximately 70 crore unique mobile subscribers in India. The recommendations of the committee on financial inclusion have yet to be notified by the RBI.

According to KC Chakrabarty, Deputy Governor, RBI, the regulator will accept everything that is viable from the recommendations.

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