Meet with public sector bank chiefs on Wednesday
The Finance Ministry has convened a meeting of the heads of state-owned banks on February 6 to take stock of their financial inclusion drive and readiness to roll out direct benefit transfer across the country.
In the run-up to the general elections, which is only a year away, the UPA Government apparently wants the financial inclusion and direct benefit transfer (DBT) initiatives to reach the bottom of the socio-economic pyramid.
Success on the financial inclusion and DBT fronts could translate into electoral dividends, said a banker in the know of developments.
Currently, the Ministry is closely monitoring roll out of banks’ financial inclusion plan in 44,971 villages with population of between 1,600 and 2,000 and habitations in the North-East and hilly States with a population of more than 1,000.
In the last two years, banks have extended banking facilities, mainly through intermediaries called business correspondents (BCs), to 74,194 villages (having over 2000 population).
Financial inclusion is the process of ensuring access to financial products and services and providing timely and adequate credit to vulnerable groups such as weaker sections and low-income groups at an affordable cost.
The activities that BCs undertake include disbursal of small-value credit, recovery of principal/collection of interest, collection of small-value deposits, sale of micro insurance, mutual funds, and pension products, and receipt and delivery of small-value remittances.
At the meeting, bankers will be sharing their experience of engaging BCs — technology, problems encountered, cases of misappropriation, frauds and action taken, whether bank account and biometric details have been migrated to the bank’s core banking solution for interoperability.
The meeting, which will be held in New Delhi, will be chaired by the new Secretary of the Department of Financial Services, Rajiv Takru.
Following the launch of the DBT scheme in 43 districts spread across 16 States last month, the Government plans to roll it out across all (604) districts of the country in a phased manner this year. DBT is expected to plug leakage of subsidies as only those below the poverty line will benefit from direct cash transfers. Large amount of cash transfers relating to subsidy given by the Government for LPG, fertiliser, old age pension, scholarship, etc., will be credited to individual beneficiaries’ bank account under DBT. In addition, several State Governments will also be undertaking direct cash transfers for various State-level schemes.
The meeting will also review implementation of DBT in the 43 pilot districts and come up with solutions to fine-tune the processes involved before its pan-India rollout.
Among others, the meeting will take stock of the progress achieved in seeding the unique identification ‘Aadhaar’ number in banks accounts; details of bank account and Aadhaar received from various ministries/departments; and steps for strengthening banking infrastructure, including opening new bank branches, installation of onsite ATMs, mobile banking, and so on.