Sitharaman said the thumb rule being used in such credit deployment activity is that for every old customer, banks should bring in five new customers. Banks will select these districts based on commercial potential.
Despite so many initiatives and schemes aimed at financial inclusion, only 40.90 per cent of SMF could be covered by the scheduled commercial banks (SCBs), the report submitted by the RBI panel has said.
On August 5, the government had announced that the entire region will cease to be a single state but would become two Union territories of J&K and Ladakh, wherein J&K will have a state Assembly under the lieutenant governor, while Ladakh will have no legislature.
An SFB is primarily set up to undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections, including small business units, small and marginal farmers, micro and small industries, and unorganised sector entities.
The government should set up a federal institution, on the lines of GST Council, having participation from both the Centre as well as the states to suggest and implement reforms in the field of agriculture, the RBI group further said.
In the last five years, the government has recapitalised public sector banks (PSBs) by over Rs 2 trillion, and recently also announced an immediate capital infusion of Rs 70,000 crore in these lenders.