The Reserve Bank of India (RBI) on Thursday announced the creation of a new financial inclusion fund with a corpus of Rs 2,000 crore to support “developmental and promotional activities” like financial inclusion and research and transfer of technology.
After the completion of the initial five years, the RBI decided to merge both the Financial Inclusion Fund and Financial Inclusion Technology Fund into a single fund — Financial Inclusion Fund (FIF).
The contribution to FIF would be from the “interest differential” in excess of 0.5 per cent on Rural Infrastructure Development Fund (RIDF) and Short Term Cooperative Rural Credit (Refinance) Fund (STCRC) deposits on account of shortfall in priority sector lending kept with NABARD by banks.
The new fund will be in operation for another three years or till such period as may be decided by the RBI and the Government in consultation with other stakeholders.
According to the Reserve Bank of India, the objectives of the Financial Inclusion Fund will be to support “developmental and promotional activities” including creating of financial inclusion infrastructure across the country, capacity building of stakeholders, creation of awareness to address demand side issues, enhanced investment in Green Information and Communication Technology (ICT) solution, research and transfer of technology, increased technological absorption capacity of financial service providers/users with a view to securing greater financial inclusion. “The fund will not be utilized for normal business/banking activities,” it said.