Money & Banking

RBI guidelines to provide universal access to financial services

Mumbai | Updated on January 10, 2020 Published on January 10, 2020

The Reserve Bank of India’s National Strategy for Financial Inclusion (NSFI) 2019-2024 has recommended increasing the outreach of banking outlets to provide universal access to financial services to every village within a 5 kilometre radius/ hamlet of 500 households in hilly areas by March 2020.

It also wants banks to move towards an increasingly digital and consent-based architecture for customer on-boarding by March 2024. In order to achieve the objective of providing universal access to financial services, the NSFI approach paper emphasised that it is important to provide a robust and efficient digital network infrastructure to all financial service outlets/ touch points for the seamless delivery of financial services.

Digital financial services

The paper underscored the need to strengthen the eco-system for various modes of digital financial services in all Tier-II to Tier VI centres to create the necessary infrastructure to move towards a less cash society by March 2022.

NSFI’s vision is to make financial services available, accessible, and affordable to all the citizens in a safe and transparent manner to support inclusive and resilient multi-stakeholder-led growth.

The approach paper wants banks to leverage on the developments in fintech space to encourage financial service providers adopt innovative approaches to strengthen outreach through virtual modes, including mobile apps, so that every adult has access to a financial service providers through a mobile device by March 2024.

NSFI suggested that the digital infrastructure must be expanded through better networking of bank branches, BC (business correspondent) outlets, Micro ATM, PoS (Point-of-Sale) terminals and stable connectivity.

Efforts must be undertaken through co-ordination with various stakeholders to ensure the creation of the requisite infrastructure for complete digital on-boarding of customers, it added.

NSFI recommended extending the digital financial infrastructure to co-operative banks and other specialised banks (payments banks, small finance banks) as well as other non-bank entities such as fertilizer shops, office of the local government bodies / panchayats, fair price shops, common service centres, educational institutions, among others, to promote efficiency and transparency in the services offered to customers.

The approach paper said that some of the issues, such as remuneration for BCs, need for furnishing cash-based collaterals, cash-management issues, and lack of insurance for cash in transit, which act as deterrents in the smooth functioning of the BC network, must be redressed by banks in a timely manner.

NSFI said banks should strive for capacity building of their BCs so that they can be utilised for delivery of a wider range of financial products, such as life/ non-life insurance products, pension products and mutual funds.

In this regard, it said every willing and eligible adult who has been enrolled under the Pradhan Mantri Jan Dhan Yojana (including young adults, who have recently taken up employment), should be enrolled under an insurance scheme (Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, etc.), pension scheme (National Pension Scheme, Atal Pension Yojana) by March 2020.

NSFI suggested making the Public Credit Registry (PCR) fully operational by March 2022 so that authorised financial entities can leverage on the same for assessing credit proposals from all citizens.

All relevant details pertaining to the ongoing skill development and livelihood generation programmes should be made available to the new entrants at the time of account opening, the paper said.

The details of the account holders, including unemployed youth and women who are willing to undergo skill development and be a part of the livelihood programme, may be shared to the concerned skill development centres/ livelihood mission and vice-versa by March 2020, it added.

Keeping in view the importance of handholding for the newly financially included self-help groups/ micro entrepreneurs, NSFI said a framework for a focussed approach, ensuring convergence of efforts from civil society/ banks/ NGOs to increase their awareness on financial literacy, managerial skills, credit and market linkages mustbe developed by National Skill Development Mission by March 2022.

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Published on January 10, 2020
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