Promoting Financial Inclusion - United Nations Development ...

• Limited number of FLCCs: One of the
key challenges for banks is to set up
an adequate number of FLCCs within
easy accessibility of vulnerable sections.
According to the RBI monthly bulletin,
banks had reportedly set up 154 FLCCs
by June 2009 which is obviously
inadequate in relation to the numerous
districtsthat are yet to be covered.
• Lack of awareness: Lack of awareness
among households also poses a problem
since people can only use the FLCC if
they are aware of the free availability of
credit counselling services.
5.2.4 KISAN CREDIT CARDS
A study on KCCs by NABARD reveals
that 42.4million KCCs were issued by the
end of March 2009. However, the scheme
continues to face some challenges.
• MIS related issues: A NABARD
commissioned study on KCCs revealed
operational problems in the issue of
KCCs. Some of these include the
issuance of KCCs to more than one
family member for the same operational
holding, provision of multiple KCCs to
the same person by different banks and
renewed KCCs being shown as freshly
issued ones. These miscalculations
and incorrect information has led to
inflation of the number of KCCs issued
by as much as 50%.
• Operational infl exibilities: The KCC
scheme intends to ensure flexibility in
credit sanctioning operations such as
issuance of ATM cards and cheque books.
However, the study of KCCs showed
that no banks or cooperatives provided
any flexibility on the credit limit.
• Inadequate credit limit: Impact studies
assessing the utility of KCCs shows that
credit limits set under the KCC scheme
are considered inadequate by a majority
of farmers.
• Elaborate documentation process: The current
application process is quite lengthy and
requires farmers to make numerous visits
to the concerned officers. Such conditions
lead to delays in sanctioning of KCCs
thereby forcing farmers to obtain credit
from informal sources.
• Lack of awareness: Many farmers are not
fully aware of the revolving cash credit
facility available under the terms of the
KCC scheme and end up using it mainly
as a one shot loan facility.
5.2.5 MOBILE BANKING
Acknowledging the presence of over 700
million mobile phone connections in India,
the RBI has permitted 32 banks to engage
in mobile banking. However, the volumes
of transactions undertaken through mobile
banking have been slow to build up on
account of various challenges faced by
banks.
• Diffi culties in establishing partnerships with
mobile service providers: The banks have
to enter into partnerships with various
technology and service providers for
facilitation of mobile banking services.
However banks find it difficult to
engage in such partnerships since mobile
service providers (MSPs) do not open
up channels for provision of mobile
banking services by banks.
• Security issues: The operative guidelines
issued by the RBI for banks state that the
technology used for mobile payments
should be secure and must maintain
high standards of confidentiality,
integrity and authenticity. In this regard
mobile operators are also responsible
for the security infrastructure, which
is embedded in mobile instruments.
One of the major challenges in this
regard is also the natural resistance and
apprehension about security amongst
most of the mobile customers.
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