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

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

Stating that his committee’s recommendations are just one more step to what is already happening in the country, Mor said, “The idea was to build on what is already going on.”

Mor conceded that new banks and large banks are, of course, required but to solve the problem of financial exclusion quickly, existing payment providers such as Airtel Money, M-Pesa and business correspondents like Fino Paytech be given more freedom.

The former ICICI bank official also said non-banking financial company’s (NBFCs) have an important role to play in financial inclusion.

“Despite the public perception that NBFCs are poorly governed, the fact is that their cost structure is superior to that of banks. Even their NPAs are low compared to banks operating in the same geography,” 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.

There are approximately 70 crore unique mobile subscribers in India.

As far as customer protection is concerned, Mor said it is important to focus more on provider literacy rather than customer literacy.