Public sector banks reached their services to more villages in FY2011 than the target set for them by the Government under its ambitious Financial Inclusion Plan.

With the Finance Ministry mandarins subjecting the implementation of the UPA Government's pet project to hawk-eyed scrutiny, these banks left no stone unturned in pushing the plan.

In FY2011, 21 public sector banks (PSBs) and five associate banks of State Bank of India collectively brought basic banking facilities to 26,630 villages, this being 118 per cent of the target of 23,629 villages. The targets were set by the Government in association with the Reserve Bank of India in order to reach the benefits of banking services to the common man.

While the pressure from the Ministry to deliver on the FIP worked in the case of PSBs, it was not so in the case of regional rural banks (RRBs), private sector banks and co-operative banks, said a senior banker acquainted with the developments ( see table ).

Thanks to the efforts put in by PSBs, all banks collectively reached banking services to 29,569 villages (against the target of 27,425) in FY2011. However, in FY2012, they are staring at a stiff target of reaching 43,381 additional villages. The FIP is aimed at providing appropriate banking facilities, including a savings-cum-overdraft account, a pure savings product (a recurring or a variable recurring deposit), remittance and payment services, insurance, and entrepreneurial credit to the underprivileged in habitations having population in excess of 2,000 by March 2012.

Unbanked villages, numbering 72,950, across the country have been allotted to different commercial banks for coverage under the FIP.

Banks are reaching their services to the identified villages by either opening branches or through business correspondents (BCs) and technologies that facilitate branchless banking at the doorstep in the rural hinterland.

“Under the FIP, we are required to achieve in two years what could not be achieved in the four decades since banks were nationalised. This is indeed a herculean task,” said a public sector banker.

The problems being faced by banks in implementing the FIP are: attrition of business correspondents/ customer service providers within a few months of starting operations due to low compensation, and new recruits not liking the job; making the accounts operative; and below par service delivery.

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