Promoting Financial Inclusion - United Nations Development ...

y domestic scheduled commercial banks
(other than RRBs).They are, however,
required to ensure that at least one-third of
such branch expansion happens in underbanked
districts of under-banked states.
This is also one of the criteria in the RBI’s
consideration of proposals by banks to open
branches in major cities.
In addition, the RBI has also introduced
a pilot project in the North-East Region
for encouraging banks to spread their
branch networks to untapped locations.
It has prepared a list of 35 under-banked
areas across five North-Eastern states. The
RBI scheme offers viability gap funding
in the form of one time capital for branch
opening and a subsidy for operational cost
for the first five years, provided the state
governments are willing to make land
available for setting-up the branch and
providing for its security. However, this
scheme has not taken off as no branch has
yet been established under it. The scheme is
apparently difficult to operate in far flung
areas without local government support in
providing security and basic infrastructure
like electricity and water.
4.10 PAYMENT SYSTEMS—
FACILITATING INCLUSION
WITH A FEW SMALL STEPS
Payment systems/remittance services form a
very important aspect of financial inclusion.
The role of technology in providing access
to such services is crucial. The efforts in
developing an effective payment system are
highlighted below:
• The National Rural Employment
Guarantee Act (NREGA) was
introduced to enhance livelihood
security by providing at least 100 days
of guaranteed wage employment in a
financial year to every household whose
adult members volunteer to do unskilled
manual work. NREGA wage payments
are now made through bank/post office
accounts with job cards serving as the
document of identity. The BC Model is
expected to play a big role in ensuring
access to bank accounts to NREGA
workers in regions with limited banking
facilities. By end-March 2009, there were
some 16 million NREGA accounts at
post offices.
• The National Payments Corporation of
India is currently engaged in a project
that will allow a recipient of a remittance
up to `5,000 to use any BC outlet
anywhere, even if he/she has no bank
account, irrespective of the bank from
where the remittance has emanated. It
will also allow seamless transfers across
banks using the new technology-driven
payment products.
• The growth of mobile phone users in
India (more than 700 million in August
2010, TRAI report) has been recognized
by the RBI as a major facilitator for
providing banking services. In this
context, the RBI issued guidelines for
Mobile Banking Transactions in October
2008. The guidelines permit banks to
provide mobile banking transactions
and mandate that all transactions must
originate from one bank account and
terminate in another bank account.
• The broad regulatory approach of RBI
towards non-banks has been to permit
these entities to provide payment services
which are fee-based without access
to funds of the customers. However,
telecommunication operators as service
providers have been permitted to enable
‘m-wallet’ facilities up to `5,000 in the
interest of small retail payments.
4.11 INTEREST RATE
DEREGULATION—ANOTHER
SMALL STEP FORWARD
Until recently, interest rates on loans up to
`200,000 in the priority sector were capped
28 PROMOTING FINANCIAL INCLUSION