Annual Policy Statement for the Year 2010-11- 20th April 2010
Part B. Development and Regulatory Policies
IV. Credit Delivery and Financial Inclusion
Financial Inclusion Plan for Banks
78. With a view to increasing banking penetration and promoting financial inclusion, domestic commercial banks, both in the public and private sectors, were advised to take some specific actions. First, banks were required to put in place a Board-approved Financial Inclusion Plan (FIP) in order to roll them out over the next three years and submit the same to the Reserve Bank by March 2010. Banks were advised to devise FIPs congruent with their business strategy and to make it an integral part of their corporate plans. The Reserve Bank has deliberately not imposed a uniform model so that each bank is able to build its own strategy in line with its business model and comparative advantage. Second, banks were required to include criteria on financial inclusion in the performance evaluation of their field staff. Third, banks were advised to draw up a roadmap by March 2010 to provide banking services in every village having a population of over 2,000. The Reserve Bank will discuss FIPs with individual banks and monitor their implementation.
Business Correspondents: Relaxations
79. Under the extant guidelines on the business correspondent (BC) model, only certain select categories of individuals are permitted to be engaged as BCs. With a view to providing more flexibility to banks, it is proposed:
to permit banks to engage any individual, including those operating Common Service Centres (CSCs), as BC, subject to banks’ comfort level and their carrying out suitable due diligence.
80. Operational guidelines to banks in this regard will be issued separately.
81. Furthermore, a suggestion has been received from various quarters to consider ‘for profit’ companies (other than NBFCs) as BCs of banks. Keeping in view the ramifications of the suggestion, it is proposed:
to prepare a discussion paper on the subject which will be placed on the Reserve Bank’s website. Based on the feedback, a final view will be taken in the matter.
High Level Committee on Lead Bank Scheme
82. On the basis of the recommendations of the High Level Committee on Lead Bank Scheme (Chairperson: Smt. Usha Thorat), the State Level Bankers’ Committee (SLBC) convenor banks were advised on November 27, 2009 that the lead banks should constitute a sub-committee of the District Consultative Committees (DCCs) to draw up a roadmap by March 2010 to provide banking services through a banking outlet in every village having a population of over 2,000. Such banking services need not necessarily be extended through a brick and mortar branch but through any of the various forms of information and communication technology (ICT)-based models, including through business correspondents (BCs). Based on the other recommendations of the Committee, the lead banks/scheduled commercial banks were advised on March 2, 2010 to (i) strengthen various fora under the Lead Bank Scheme; (ii) discuss specific issues enabling and inhibiting financial inclusion in the SLBC/DCC machinery; (iii) set up separate sub-committees to work intensively on specific issues; and (iv) prepare district credit plans/annual credit plans linked with the business plans of the banks. For this purpose, it is proposed:
to put in place an appropriate monitoring mechanism of the working of the SLBCs/DCCs.
Priority Sector Lending Certificates: Working Group
83. In pursuance of the announcement made in the Second Quarter Review of October 2009, a Working Group on Introduction of Priority Sector Lending Certificates (PSLCs) (Chairman: Shri V.K.Sharma) was constituted by the Reserve Bank in November 2009 to examine the pros and cons of the recommendation made by the Committee on Financial Sector Reforms (Chairman: Dr. Raghuram G. Rajan) relating to PSLCs and make suitable recommendations on its introduction and their trading in the open market. In this context, it is proposed:
to expand the terms of reference of the Working Group to also review the pros and cons of inclusion of bank lending to micro-finance institutions (MFIs) under priority sector lending. The Group is expected to submit its Report by end-June 2010.
Urban Co-operative Banks
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