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Another route for achieving financial inclusion

With all the efforts made by the banking sector to expand rural branches, their number, including those of gramin banks, is not more than 44,624 as on June 2014. Under the Branchless Banking Model, banking sector has appointed 195,380 business correspondents, who are supposed to cover 221,341 villages as on March 2013. A good beginning, no doubt, but India has over six lakh villages.

 There are 2.33 lakh gram panchayats. 25 per cent of these panchayats do not have their own buildings. This grass-root level agency needs to be reinforced to morph into Grama Vikas Kendras, as a part of the financial inclusion programme. Gram panchayats must be allowed to obtain loans from commercial banks for constructing their office building while should house the panchayat office, the rural bank branch, a post office, and a primary health centre. It should be located in a central village connected to the market place, preferably on the highway. Since all bank branches now are on Core Banking Solutions (CBS), space required for the branch is not very large. This building, providing essential services under one roof, can become Grama Vikas Kendra, the centre of developmental process. A cash-dispensing machine can be installed to be functional from dawn to dusk. Rent collected on a commercial basis from the ‘tenants’ occupying the premises should be sufficient to repay the loan. National Housing Bank can be roped in to extend refinance to the banks for lending to gram panchayat for this purpose.

Non-availability of premises in rural areas is one of the major constraints faced by banks in opening rural branches.. Nearness to the base branches would enable the business correspondents to devote more time to their customers. With imaginative planning Grama Vikas Kendras could be made as the epi-centres of growth impulses in rural India. Public sector banks have to take a pro-active role, especially in their lead districts for this purpose. Reaching out to rural population would be much effective through this centre.


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