Providing access to banking facilities to all is a herculean task in India, but together with Aadhaar and a right push to the field staff, it doesn’t seem all that difficult to herald the anytime, anywhere banking age, says L M Deshmukh
Recently, the Government of India came up with “Sampoorna Vittiya Samaveshan” plan, a comprehensive financial inclusion programme, which was launched by the Prime Minister on 15 th August. Bank of Maharashtra has been implementing financial inclusion since 2005 but the focus area has now changed. Earlier, villages were kept in focus for financial inclusion but now families as well have come in prominence. Apart from opening an account, credit will also be made available to all the families who open the accounts under this programme.
Focus on urban excluded
Urban financial inclusion, which was not given much attention previously, will also be added in this programme. Financial literacy is an important area which was not integrated earlier, but now it is very much part of financial inclusion. Micro insurance and “Swavalamban” pension scheme have also been introduced in this and the entire programme will be implemented in a time bound manner.
Around 42 percent population of India was without a bank account as per the census of 2011, but since then banks have taken many initiatives for opening accounts. It is still presumed that around 7.5 crore families are not having any account in any bank, and in this one year we have to cover all these families.
In Maharashtra, the condition is a little bit better because out of 2.38 crore families, only 74 lakh families (around 31 percent) are yet to open accounts. With the introduction of 13,000 BCs (Banking Correspondents), we will be in a position to provide all these families with bank accounts soon.
The BC model
This entire exercise is to be done with the help of BC model, which is the backbone of financial inclusion. BCs are extended arms of the banking industry as they work in the rural areas and are an integral part of the banking industry. Earlier, when the BC model was introduced in 2006, its authenticity was in doubt and people were not confident about the model. But since then, their vitality has now been authenticated and everybody has warmed up to this model.
Business Correspondents work with biometric authentication and Aadhaar-enabled Payment Systems (AEPS) technology. This technology will create a revolution in the banking industry as currently banks perform on CBS platform, which is a form of branch banking. Then come ATMs where you can withdraw from any bank’s ATM. In case of an ATM a customer is required to come to the ATM, but in the case of financial inclusion, BC model or AEPS technology, BCs go to the customer. This is a much more customer-centric technology and therefore creating a revolution in the banking sector.
This system is possible immediately with the introduction of interoperability. But some challenges remain. The first challenge is the sustainability of the BC model as attrition rate of BCs is very high. There is also an issue of affordability. Some of the other such issues are:
– In rural areas people do not know why they should open an account in a bank, and that answer lies in financial literacy.
– Cash management in the rural areas as well as in urban areas is also a big challenge in the implementation of the BC model.
– Connectivity issues are also there; in many areas connectivity is not available when the customer arrives
Aadhaar ceding is another challenge, bankers are having 65 crore accounts all over India but Aadhaar ceding at present is something around 12-15 crores, i.e., 20 percent; another 75-80 percent are yet to be Aadhaar ceded.
Then there is the sensitisation of the field staff. It could be my branch manager in the field and I accept that they are not happy with the BC model and as bankers from the head office level, we have to sensitise these bankers as after this stability is achieved everything will be okay.
“Around 42 percent population of India is without a bank account as per the census of 2011, but since then banks have taken many initiatives in opening accounts. It is still presumed that around 7.5 crore families are not having any account in any bank”
ATMs as banks
I also visualise about the AEPS technology and BC model technology, where every micro ATM will be situated at every 100 meters distance and people will be able to withdraw their amount from any bank’s ATM anywhere in India as there will be interoperability between the banks.
This is what I am seeing and in that case if all the customers start withdrawing from ATMs, I doubt how many customers will be there in the branches. But I feel that I will be using my branch work as a sales network, just like a sales showroom — like a car showroom where the cars are sold in a showroom whereas servicing is being done at some service centre — I will be using my branch work as sales room and my BC point as a service centre.