RBI panel to push financial inclusion

The Reserve Bank of India has set up a 14-member committee for working out a medium-term (five-year) measurable action plan for financial inclusion.

Financial inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general, and vulnerable groups such as weaker sections and low-income groups in particular, at an affordable cost in a fair and transparent manner by mainstream institutional players.

According to its terms of reference, the committee headed by Deepak Mohanty, Executive Director of RBI will review the existing policy of financial inclusion, including supportive payment system and customer protection framework.

The committee will suggest a monitorable medium-term action plan in terms of its various components, such as payments, deposits, credit, social security transfers, pension and insurance.

It will also study cross-country experiences in financial inclusion to identify key learnings, particularly in the area of technology-based delivery models, which could inform people of RBI’s policies and practices.

The committee will articulate the underlying policy and institutional framework, also covering consumer protection and financial literacy, as well as the delivery mechanism of financial inclusion encompassing both households and small businesses. It will do so with particular emphasis on rural inclusion, including group-based credit delivery mechanisms.

The RBI, in a statement, said the committee has been formed in the backdrop of the Prime Minister urging it to take the lead in encouraging financial institutions and to set a medium-to-long term target for sustainable financial inclusion. The committee is expected to submit its report in four months from the date of its first meeting.

Members of the committee include: Ashok Gulati, Infosys Chair Professor for Agriculture, Indian Council for Research on International Economic Relations; AP Hota, MD and CEO, National Payments Corporation of India; Paresh Sukthankar, Deputy Managing Director, HDFC Bank; Kishor P Kharat, Executive Director, Union Bank of India.

The Government is pushing financial inclusion through four schemes – Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (ABY).

Accodring to Finance Ministry data, banks had opened 16.73 crore basic savings bank deposit accounts under the PMJDY, which was launched in August 2014, up to July 8. The outstanding balance in these accounts aggregated ₹19,990.52 crore.

About 51 per cent of these accounts have zero balance. PMJDY’s benefits include a RuPay debit card, ₹1 lakh accident insurance cover, and an additional ₹30,000 life insurance cover.

It is a platform for Direct Benefits Transfer (DBT) which, in turn, will help plug leakages in subsidies.

The gross enrolment under the PMJJBY, which offers life insurance coverage of ₹2 lakh for savings bank holders in the age group of 18-50 years on payment of ₹330 a year, stood at 2.71 crore as on July 14.

The gross enrolment under the PMSBY, which provides insurance coverage of ₹2 lakh on payment of ₹12 per annum, was at 7.87 crore. The gross enrolment under the APY, which will provide a fixed minimum pension ₹1,000-₹5,000 a month (depending on the monthly contribution and age at which the subscription starts) beginning from the age of 60, was at about five lakhs.