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Financial Inclusion mission has better design over previous plans: Bankers

Ahead of rollout of financial inclusion (FI) mission by Prime Minister Narendra Modi on Independence Day, public sector bankers are working overtime to plug gaps that had hit previous FI campaigns.

Preferring to call them as “learning lessons”, bank executives said design for new program has been finalised after feedback from branch network and extensive consultations.

In previous avatar, there were problems in geographical coverage, poor remuneration to Business Correspondents and quality of co-ordination.

Non-coverage of entire geography

The earlier campaign had focused only on the supply side. It looked at providing banking facility in villages of population greater than 2,000 but the entire geography was not targeted.

Now coverage is entire geography with at least one account per household which is not under ambit of banking and financial services.

Lack of convergence in various elements

There was lack of convergence in account opening, micro-credit, insurance and pensions. Mindful of gaps, this time around newly opened accounts come with an ATM enabled Ru-Pay card.

The card will have accidental insurance benefit upto Rs one lakh. Further, as part of the Mission, Kisan Credit Card (KCC) will also be provided with RuPay Card.

Poor remuneration to BCs

During previous campaigns, the remuneration to Business Correspondents (BCs) was very poor and often delayed.

Now, the plan is to pay BC, referred as Bank Mitra, at least Rs 5,000 each month. Plus, there will be additional transaction and activity based variable component. Banks would also design scheme for financing the BCs with loans to cover their working capital and transportation needs, said a senior executive with Mumbai-based state lender said.

Dependability and Trust issue with a mobile BC.

There were challenges in making effective use of mobile BCs to reach unbanked households. One of the major differences with the earlier program is ensuring uniform coverage with fixed point Bank Mitras instead of mobile BCs covering only bigger villages. This will help to ensure most of places will have access to Banking services within a reasonable distance say about five km by August 2015. Areas facing telecom connectivity and infrastructure constraints will be covered by August 2016.

Technology glitches and headaches

Some technology issues like offline transactions and lock-in to a particular vendor had hampered further scalability of the campaign. Even in the on-line accounts, server was kept separately preventing the account holder to operate the account from locations other than BC.

Senior PSB executive said now emphasis will be coordination to address glitches and connectivity related issues in remote areas. There will be panel of stakeholders to sort out technology issues.

Lack of Financial Literacy and poor operations in the accounts

In previous avatar the deposit accounts opened under the campaign had very limited number of, or no transactions. The task of Financial Literacy and Credit Counseling (FLCC) did not go hand in hand with the campaign.

The mission mode has proposed to provide basic financial literacy including operating an ATM card and benefits of the repayment of the overdraft due during the camps to be conducted for account opening.


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