The importance of financial inclusion cannot be overemphasised as the country has entered the second phase of economic reforms, said the RBI Governor, Dr D. Subbarao, here on Wednesday. Banks, he said, have to play a crucial role by reaching out to rural as well as remote areas.
On a private visit to the port town, Dr Subbarao addressed the local bank officials and said that most of the 6 lakh villages in the country were beyond the pale of banking and earnest efforts should be made to make banking services available to rural people.
Citing the example of Ernakulam in Kerala, he exhorted bankers in East Godavari to emulate their Kerala counterparts and achieve 100 per cent financial inclusion.
Business correspondents
Appointment of business correspondents to take banking services to rural areas was a good step, he told the bankers, but that alone would not be sufficient.
They, he said, should educate the rural people on opening a bank account and conducting transactions bank. The banking habit should be inculcated among the people by making special efforts, he added.
SME lending
He also told the bankers to be more active in lending to small and medium enterprises (SMEs).
Up to Rs 10 lakh can be lent to the SMEs without collateral, but most banks were fighting shy, he observed. He wanted banks to lend more to SMEs and also make efforts to improve recovery.
Referring to the economic situation in the country, he said inflation would come down further and the rupee is likely to gain strength and stabilise in the New Year. He attributed the present situation to external factors rather than internal ones.