Even as FMCGs have penetrated rural markets in a major way and there are over 600 million mobile subscribers around the country, only 40% of the population still holds bank accounts. So, financial inclusion remains a study in contrast to the advancements that have taken place in many business sectors, said Mr Sachin Pilot, Minister of State for Information Technology, Government of India, in his valedictory address at the Financial Inclusion Summit organised by Confederation of Indian Industry (CII) in New Delhi today.
Mr Pilot said the situation calls for a shift in the mindset of the large segment of society toward accessing banking services, especially in rural India. He said that the priority sector lending that is mandated on banks has somehow not delivered the expected results in terms of financial inclusion. The big change, he said, would come about with the adoption of tailormade solutions, such as, use of regional languages in banking transactions.
The minister said that with panchayats across the country being connected with broadband services, technology can be better used to further financial inclusion in the rural areas. At the same time, due attention is required to ensure that the banking services are safe, secure and affordable. Importantly, the benefits need to be visible to the larger populace.
Mr Pilot also said that the UPA Government is extremely focused on promoting financial inclusion. At the same time, the effort should go beyond creating no-frills accounts that largely remain “dead accounts” and instead link up the financial inclusion initiative with the economic activities of the stakeholders.
Talking about his own ministry’s initiatives, Mr Pilot said that 2.5 lakh common service centres are being set up across the country through which people would be able to access various financial services. He also called for greater coordination between the ministries and departments in promoting the cause of financial inclusion.
Earlier, Mr R Gopalan, Secretary, Financial Services, Ministry of Finance, said in his address that only 30% of the bank branches operate in the rural areas that house 72.2% of the country’s population. Further, rural India accounts for just 9% of total deposits, 7% of total credit, 10% of life insurance and 0.6% of non-life business. There is therefore an urgent need to fast-track financial inclusion, he said, adding that the various technological and financial services and initiatives need to be dovetailed for this.
Mr U K Sinha, Chairman, CII National Committee on Mutual Funds and Chairman & Managing Director, UTI Asset Management Co. Ltd, said in his address that while Government is not immune to the need for financial mainstreaming the society at large, systems like the 3-tier banking systems and state financial corporations have not adequately bridged the financial needs of rural India.
In view of this, he said the regulators should be watching the ground realities with greater intensity. At the same time, there ought to be greater synergy in the functioning of all entities associated with the process of financial inclusion, which includes technology service providers.