Financial Inclusion has been talked about at various levels during the last couple of years, perhaps not with the seriousness it has acquired. Pradhan Manthri Jan Dhan Yojana (PMJDY) launched throughout the country, opened banking doors to millions of Indians who till then never banked.
Banks were directed to open 7.5 crore new bank accounts by 26 January, 2015. The main features of PMJDY scheme include an overdraft facility of Rs.5000 for Adhar-linked accounts. Besides this, it also offers facilities of RuPay Debit Card with inbuilt Rs. 1 lakh accident insurance cover.
According to available preliminary reports relating to the achievement made in opening new accounts, the banks have as of 8 September, 2014, opened an impressive 3.02 crore new accounts. Interestingly of this 1.89 crore new accounts have been opened in rural branches. State Bank of India is reported to have opened 30 lakh new accounts, the highest among all banks.
Public sector banks have been more aggressive in opening new accounts compared to the private sector. According to available data the bigger private sector banks have opened only 5.8 lakh accounts. Regional rural banks have a much better record of adding 49.28 lakh accounts. The new generation banks are perhaps more interested in catering to their ultra urban customers.
Don’t let them become dormant a/c
Opening of new accounts is not the ultimate goal. Banks must ensure that the new accounts do not slowly slip into becoming dormant accounts. There are already enough dormant accounts in the banking system! Banks must constantly keep in touch with the account-holders and encourage them to save, whatever little they can and include that in their savings accounts. Since all bank branches are already under Core Banking Solutions (CBS), it is operationally easy to credit the small amounts to their accounts, with very little manual intervention.
Bank staff to become stakeholders
It is reported that State Bank of India, the leader among the public sector banks, is considering a proposal to offer Employees Stock Option Scheme (ESOS) to its staff. It is a welcome change in the rigid po licy framework of the public sector bank. ESOS would give the employees of the bank the right to purchase or subscribe to the shares offered by the bank at a future date and at a pre-determined price. The objective is to motivate the staff to perform better. It also indirectly intended to attract the best talent and also to retain them.
Many companies in the IT sector, where the attrition rate is very high, have been successful in attracting and retaining their staff through ESOS. With the entry of new banks as well as the appearance of whollyowned subsidiaries of foreign banks, there could be an exodus of trained staff from the public sector banks. The severity of the likely impact of such cases can be reduced through the adoption of ESOS. It is interesting to note that the Government of India, the owner of public sector banks, is agreeable in principle to this change.
When most of the banks were in the private sector, some of the banks did encourage their staff members to become shareholders. After the nationalisation of banks, no such attempt appears to have been made by banks. By making the staff as stakeholders, it is possible to curb the uncontrolled growth in non-performing assets in banks.