The first phase of the 2011 Census has thrown the gaps in financial inclusion into stark relief.
While urban India has been getting access to, and avails itself of banking services at a rising rate, large areas of rural India are still severely under banked.
According to the House listing and Housing Census data culled from Census 2011, over two-thirds of urban households – 67 per cent – are getting banking services. In contrast, only a little over half of rural households – 54 per cent – have access to banking services.
Though the Government says that banking services have spread, urban areas clearly continue to get maximum focus. The Finance Ministry itself says only about five per cent of the nearly 6 six lakh villages in the country have bank branches. There are as many as 296 under banked districts in the under banked States.
In order to provide financial inclusion, a total of 72,721 villages with population of 2,000 or more as per 2001 census have been identified. All these have to be covered under financial inclusion by March 2012. By January, 2012, over 62,000 villages have been covered by bank branches or business correspondents.
In addition, considering the population distribution in States such as Arunachal Pradesh, Himachal Pradesh, Meghalaya, Mizoram, Uttarakhand, Chhattisgarh, Andaman & Nicobar, Daman & Diu, Puducherry and Lakshadweep, all villages with population of 1,000 and above in these States must be covered by September 2012, the Finance Ministry has mandated.
In habitations without a bank branch, the scheme says there should be one business correspondent/agent within a radial distance of 2 km. On the other hand, the banks have been asked to open a regular branch in villages with population of 5,000 and above (in under banked districts) by September 2012.
The scheme says, “While planning for branch expansion, it may be seen that in the unbanked areas the branches are available within a radial distance of 5 km.”