Banks should move beyond the traditional business model and opt for mobile banking to achieve last-mile connectivity for service delivery in the remote areas, a Reserve Bank of India committee has said.
The Committee on Medium-term Path on Financial Inclusion, headed by Deepak Mohanty, has underlined that the banks should make special efforts to step up account opening for women.
The Committee, which is quite broad in scope, much beyond the traditional domain of the central bank RBI, also observed while releasing the report that the government should consider a deposit scheme for the girl child – Sukanya Shiksha – as a welfare measure.
It suggests phasing out the agricultural interest subvention scheme “which has distorted the agricultural credit system” and ploughing the subsidy amount into a technology-aided universal insurance scheme for marginal and small farmers for all crops, with a ceiling of Rs 2 lakh at a nominal premium to end agrarian distress.
The report said that given the predominance of individual account holdings (94 per cent of total credit accounts), a unique biometric identifier such as Aadhaar should be linked to each individual credit account and the information shared with credit information companies to enhance the stability of the credit system and improve access.
To improve last-mile service delivery and to translate financial access into enhanced convenience and usage, a low-cost solution should be developed by utilisation of the mobile banking facility for maximum possible government-to- person (G2P) payments, it said.
“Although a quantum jump in banking access has taken place, a significant element of regional exclusion persists for various reasons that need to be addressed by stepping up the inclusion drive in the north-eastern, eastern and central states to achieve near-universal access”.
The report further said, “This may entail a change in the banks’ traditional business model through greater reliance on mobile technology for ‘last mile’ service delivery, given the challenges of topography and security issues in some areas. The Government has an important role to play in ensuring mobile connectivity.”
In some of the areas, mobile connectivity may not be commercially viable to start with, but the telecom service providers may be encouraged to use their corporate social responsibility (CSR) funds for this purpose, the Committee pointed out.
The Committee is of the view that the State Level Bankers Committee (SLBC) is an appropriate forum to address such infrastructure issues in a collaborative manner. The use of Universal Service Obligation Fund (USOF), a non-lapsable fund designed to support a variety of innovation initiatives, can also be explored in this regard.
In order to increase formal credit supply to all agrarian segments, the report said digitisation of land records is the way forward and “this should be backed by an Aadhaar-linked mechanism for Credit Eligibility Certificates to facilitate credit flow to actual cultivators”.
The central bank has sought comments on the report by January 29.