Puducherri, Himachal top financial inclusion

MUMBAI: The Union Territory of Puducherri and Himachal Pradesh are claiming to have achieved 100% financial inclusion.

Speaking at a Ficci-IBA conference on the paradigm shift in global banking, Reserve Bank of India (RBI) executive director VS Das said that each household in Puducherri and Himachal Pradesh has, at least, one bank account. States such as Gujarat, Karnataka and Kerala will also achieve a 100% penetration in coming months. However, a lot needs to be done in Bihar, Uttaranchal, Chhatisgarh and the North-East, he added.

The central bank had set up working groups in these states in order to promote financial inclusion. RBI is now in talks with the Directorate of Information and Public Relations and the Directorate of Field Publicity in order to facilitate better dissemination of information and better financial literacy, Mr Das said. He highlighted the need to human resources and leadership at banks, in order to change the mindset towards inclusion. The central bank’s emphasis on financial inclusion, which got a major thrust after its November 2005 monetary policy statement, has started making an impact, he said.

The central bank has been working on different models to further the cause of financial inclusion in the recent past, chiefly the business correspondent model. According to Mr Das, RBI is also working out the possibilities of making use of the network and relationship the postal system has in the hinterland. “We are also working on leveraging IT-solutions like hand-held smart card readers and biometric banking,” he added.

Speaking at the same conference, Robert Annibale, Citi’s global head for microfinance, said that microfinance providers need to go beyond just no-frills accounts and look at providing multiple options. Over six million new accounts have been opened in rural and semi-urban areas in the year-ending March 2007 itself. “India has made some great strides in the field of inclusion, but a lot needs to be done,” he said. Mr Annibale also raised questions about the regulated ATM environment, saying that more ATMs will only help the cause of inclusion.

At the same time, inclusion will require innovative steps, feels S Balasubramanya, vice president, Tata Consultancy Services. Explaining that it’s a myth that all villages can be satisfied by the same solution, he stressed on the need for a customised approach.