‘Need for more banks in villages to improve financial inclusion’

These are the findings of a recent study conducted by a 12-member working group headed by Rita Teaotia,an IAS officer,to review the status of financial inclusion in Gujarat.

The group has suggested adoption of mobile technology to provide banking services at the customers’ doorstep or use of the existing network technology wherein bank staff can work as ‘business correspondents’,to strengthen financial inclusion in the state.

The State Bank of India has introduced kiosk model with the help of network connections in villages,while Dena Bank is using hand-held instruments in its pilot projects in Kutch and Banaskantha districts. But both agree that the state government should share cost where transactions relate to payments made on behalf of the government.

Kutch and the Dangs districts have the highest number of villages (108) without banks (in a 15-km radius) followed by Valsad (68) and Narmada (45). Kutch also tops the districts with the highest number of villages (234) without bank branches within a 10-km radius. Vadodara (603 villages) tops the districts with villages not having bank branches within a 5-km radius. In Kutch,550 villages do not have a bank within a 5-km radius.

Based on the findings,the working group has suggested that in the first phase,satellite offices or full-fledged branches be opened in nine districts where the number of villages without a bank branch is in the range of 1-11. In the second phase,it has suggested opening bank branches in five districts in 2010-2011 where the number of villages without a bank branch within a 15 km radius is more than 11.

Mukesh Jain,General Manager,Dena Bank,who was a member of the working group,said the State Level Bankers’ Committee (SLBC) will undertake fresh mapping and annual review of the banking services in the rural areas.

The sharing of transaction costs with the state government will be sorted out with a holistic approach after the issue is examined by the Finance Department,he said.

The recommendations came in the wake of a high-powered committee formed under RBI Deputy Governor Usha Thorat.