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Drastic decline in asset quality Thirty more cities seek to become SMART Small finance banks offer high interest rates Nothing much can happen…. Hesitancy in announcing year-end results Growing volume of stressed assets… What is the priority – mergers or NPA reduction? Mega merger is on Merger mania haunts banks Emerging crisis Lacklustre credit expansion Reaching the Unreached… The collaboration suite of cyber criminals Needed a Banking Atlas Monetary policy continues to adopt dis-inflationary path Aadhaar, niraadhaar and banking Grows Bigger Payment banks have arrived Why priority status? Cautious and considerate Another route for achieving financial inclusion A development bank for BRICS Financial inclusion vs unclaimed deposits Small is ‘more’ beautiful Greet Lakshmi the banking robot LVB- A supermarket of financial services Rationalised Managing NPAs... Small finance payment banks... New bank licences, at last... United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu Holy or unholy? Cut in repo rate – lower than expected Two banks: their jubilees and performances How ‘secure’ are the secured loans? One down in private sector Good, bad and ugly Ernakulam excels... Governance in Reverse Gear? Big bank merger, bigger expectations Banking overhauling or reorganisation? Just 660 days! Target over-ambitious... Who is the real beneficiary? Smart banking in smart cities Perhaps small is more beautiful than big! Bank deposits account for 46.3 per cent of household savings Well-lived... Growing gainfully Why any time money? It’s a war on black money, support it. Targets continue to be ad hoc The paradox: clamour for the Goliath and David Banking on Risk Anytime banking to anywhere banking Drop in SLR- sparing lendable resources Cradle of banks to a smart city... A new development bank rising in the east… All that glitters is not gold... New capitals of Migrant banks Banking in Telangana A bank for women, by women From lazy banking to easy banking Fund healthcare clinics in villages... Reaching out: is it slowing down? How okay are new banks? Indian customers are tech savvy Bottomlines shrink, bad loans rise... Capital base of regional rural banks raised Ferrying digital banking to Lakshadweep Stage set for Indian ‘avatar’ of foreign banks Too big to fail and too small to sail Insatiable appetite for credit
 
Just 660 days! Target over-ambitious...
RBI has been concerned with the health of the Indian banking sector. But rarely has it probed into the wealth of banks, symbolised by the width of the customer base or the strength of its service points. In fact there were stringent regulations regarding locations of new branches.

For nearly a decade we have been talking about financial inclusion. Ever since the Dr. Rangarajan Committee asserted that financial inclusion is no more an option, but a compulsion, banks have been announcing their achievements in reaching out to the unreached. In claiming their successful sojourn into the unchartered areas, they are not comparing their data with the benchmark data. There is the thoughtfully framed slogan ‘Step into a bank and step out of poverty.’ But the banking sector has to travel a long distance to enable the aam aadmi to step into the nearest branch. True, many steps have been taken to facilitate access to banking. Account opening norms have been diluted and accounts can be opened with zero balance. Branch licensing policy has been liberalised to enable banks to open branches in unbanked areas. Better still, branchless banking has been accepted.

 

Financial inclusion...

The RBI appointed a Committee on Comprehensive Financial Services for Small Business and Low Income Households, with a mandate for framing a clear and detailed vision for financial inclusion and financial deepening in India. The report has six stellar statements to achieve full financial inclusion and financial deepening. One of them is having Universal Electronic Bank Account (UEBA).

While this is salutary, the target dates suggested are over-ambitious. Under the UEBA, by 1 January 2016, every Indian above 18 years of age  would have an individual, full-service, safe, and secure electronic bank account. It is certainly possible, as many developing countries have already achieved this goal.

According to the IMF Financial Access Survey: 2012, developed countries have about 3000 deposit accounts per 1000 adults. Comparative figure for India is 1042 per thousand adults. Japan has a high 7285 deposit accounts per 1000 adults, while mainland China has an unbelievably low figure of 35.

 

The Indian scenario…

For a population of 125 crore, commercial banks in India have 90 crore deposit accounts. Despite KYC data being religiously collected and updated by banks, no estimates of the actual number of depositors are available. Bank customers, who have savings bank deposit accounts, invariably have a fixed deposit account also.

By the way, the Committee has not given any indication of the number of new accounts to be opened before the target date. It is not clear as to whether the zero balance accounts have to be converted into UEBA. New numbers have to be given to them, which already have 14 digits.

The census does not have information on the number of adults of 18 years and above. No estimates are readily available as to how many of them are already bank depositors as on date.

Ensuring every adult in India has electronic bank account within the next 22 months would be difficult. Although mobiles have penetrated into thousands of villages, where neither electricity nor telephones could reach, banks may not reach out to the target groups in 660 days. Target dates may be fixed more realistically on a region-wise basis, taking into consideration the inadequacies of the necessary infrastructure facilities.

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