IT is Crucial for Financial Inclusion

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P K Jena, Regional Director, Reserve Bank of India

‘’Commitment is important for me. Whatever policy announcement is done, if you believe it in spirit, you can deliver’’ P K Jena, Regional Director, Reserve Bank of India. In Conversation with Kartik Sharma & Nayana Singh

Please give us an overview of the operations of RBI with emphasis in Odisha and RBI’s initiatives in the area of Financial Inclusion?

At present, Financial Inclusion is the priority area as far as the Government of India is concern, simultaneously for the entire banking industry. Unless there is Financial Inclusion, neither banking industry can grow, nor will economy instead there will have difficulties. Almost at every point, there is difficulty. Be it is last mile connectivity, infrastructure, and human resource or be it a business issue, there are constraints and we have to overcome these. For the last couple of years, we are following Banking Correspondent (BC) agent model. As of now, we have 2900 banks in Odisha (including RBs, Commercial Banks, etc). Now, in terms of number it is not lagging behind the national parameter but we have difficulties with the hilly terrains, geographical conditions and areas with thin population, where banking penetration is not that high. What we are trying, through this Banking Correspondent model is to find those areas where we can have the agents for our module and we name them as Banking Correspondent. He will then help us in identifying the places where we can have the banks in those particular areas. He will be assigned certain villages with handheld device. That device has a chip, which is connected with bank’s main server. With this, basic transaction like, deposits and withdrawal, can be done in the doorstep of a villager. Unless any village has got high population and good business, there is no point of having a fully fledged bank. It is also not viable for them. At the end of the day, these are commercial banks.

While addressing the public in Odisha, Dr Deepali Pant Joshi, Executive Director, Reserve Bank of India said,’’Through bank accounts one can remit money and also get the MGNREGA/ Pension directly credited to their account.” Further, she advised to avail loans from banks and; to repay promptly, to be cautious about fictitious SMS/letter informing winning of lotteries and unauthorized deposit accepting entities.

Everywhere it cannot be a social objective altogether. It’s ok for once to have a social objective, but you cannot cover entire 48000 thousand villages in the state of Odisha like that and to cover 48000 villages, you cannot have branches in every village. Government of Odisha has also announced few months back, ‘Rajiv Sahayata Kendra’. This is a good initiative on the part of government and government is also very committed. In this way things are picking up. Initially there were problems with BCs, their salary, etc, but slowly things are moving. Gradually issues are getting addressed. Not one, but many banks has got BCs. State Bank, Bank of India, Andhra Bank, UCO bank, Yes bank, etc have got their BCs aiming various districts.

So there is a concept of state level bank committee?

Yes, it is there, it is nothing new. It is being there from ages. Since I have joined bank industry, it was there. It is basically a forum, where all the stakeholders, associated with banking industry come together and address issues which are of common interest. It is a high level forum. Various departments of the government, like agriculture, fisheries, animal husbandry, etc and their representatives with the entire bank’s heads come together in this forum. This is the highest platform.

What measures you have taken to grow financial literacy?

Financial literacy is very much critical area. Deposit, access to credit, insurance and basic service is provided- we are focusing on these basic four aspects. We have told banks to set up financial interest centre in districts. They are engaging ex-bankers on a contractual basis. His job is not only confined to providing information about banking problems, but he is also responsible for advising people on how to open up a business and how to go about it.

What are the efforts taken by RBI to spread financial literacy among masses?

Every eligible individual should have a bank account and Reserve Bank is working towards this. Through these programmes, RBI makes an effort to reach out to people and spread financial literacy and create awareness regarding banking services among people.

Do you think there is lack of payment mechanism system, like lack of ATMs in rural areas?

Just imagine a scenario, where there is no ATM even in a city! At the same place, people are saying that, to deposit  Rs 500, they have to go 6 kms. So if one starts at 7 a.m from home, he can come back to house only by 11 after banking transactions, because he has to collect money from different areas. So the aim is to decongest branches. Mobile banking can also be an option. But, ultimately it’s a question of physical cash coming in. You order a pizza over a phone, but pizza has to be delivered. Ultimately physical cash is required and India, till today, by and large has got cash culture. Physical cash will remain.

What are the initiatives for agriculture sector are being taken in terms of Financial Inclusion?

For this you have to talk to bankers. Our role is to provide finance to the sector. Our role is confined to how best we can provide adequate and timely finance to the person who needs it in the agriculture sector. We are committed to support any kind of agricultural move.

According to you, what is the role of IT in this?

Whatever I am telling you, is possible only because of IT. When we talk about ATM, basically we are talking about connectivity and network and that is IT. It is the main thing.

In rural sector, do you think private banks are reluctant to go?

It’s not like that. Axis bank has got more than 100 branches in Odisha. This year itself, they have opened up 30 branches. I hail from this state. Personally I feel that in this position I should try to ensure that there is infrastructure. So, you have to start in cities and then move. Wherever there is business opportunity, bank will go there. Let’s be clear about that.

What is your vision for Financial Inclusion in Odisha ?
By 31st March, 2016, we will be able to cover all the villages through BC model in the state of Odisha.

 

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