Indian SMEs to cash in on China’s thrust on imports
In an attempt to widen the reach of banking services,
the government has embarked on an ambitious project by way of which it
intends to establish banking facilities in all villages of the country
having population of over 2,000 by March 2012.
The government’s decision is said to benefit nearly 60,000 village folks, according to Namo Narain Meena, minister of state for finance. The minister also added that the banks will offer the services via the business correspondent model, with suitable technology support.
Analysts and micro-finance institutions are of the opinion that business correspondent model is well-suited to serve the MSMEs in rural areas, but the government should place emphasis on making the implementation more flexible. Up gradation of IT infrastructure is yet another crucial aspect in this model. If executed properly, the BC model will help the MSMEs in rural areas aid in the growth of the business, thereby giving a boost to the country’s GDP growth.
Proposals
The Reserve Bank of India has already made flexible the branch licensing policy in those areas where banks have little access. The top body has already allowed all commercial banks, except local banks to establish branch offices in Tier III and Tier VI centers having a population of upto 49,999 as per the Census survey of 2001. For this the banks don’t have to seek any official permission from the RBI.
In addition, the government, RBI and other banks have reduced the number of un-banked blocks in the last 7-8 months. In July 2009, around 129 unbanked blocks were identified in the country. However, given the concerted efforts by the Government, the Reserve Bank of India (RBI) and the banks to offer banking facilities in these areas, the number has come down to 93 in February 2010.
The government has also made bigger Financial Inclusion Fund (FIF) and the Financial Inclusion Technology Fund by Rs 100 crore each. The fund will be contributed by Government of India, RBI and NABARD.
As per the government sources, factors such as lack of infrastructure, inhospitable terrain, messy laws and low populace has stopped the centre from offering banking facilities in the rural areas. The government has firmly decided upon to extend these benefits to the rural population despite the drawbacks. This in fact will help give a major boost to the rural economy of India.
The government’s decision is said to benefit nearly 60,000 village folks, according to Namo Narain Meena, minister of state for finance. The minister also added that the banks will offer the services via the business correspondent model, with suitable technology support.
Analysts and micro-finance institutions are of the opinion that business correspondent model is well-suited to serve the MSMEs in rural areas, but the government should place emphasis on making the implementation more flexible. Up gradation of IT infrastructure is yet another crucial aspect in this model. If executed properly, the BC model will help the MSMEs in rural areas aid in the growth of the business, thereby giving a boost to the country’s GDP growth.
Proposals
The Reserve Bank of India has already made flexible the branch licensing policy in those areas where banks have little access. The top body has already allowed all commercial banks, except local banks to establish branch offices in Tier III and Tier VI centers having a population of upto 49,999 as per the Census survey of 2001. For this the banks don’t have to seek any official permission from the RBI.
In addition, the government, RBI and other banks have reduced the number of un-banked blocks in the last 7-8 months. In July 2009, around 129 unbanked blocks were identified in the country. However, given the concerted efforts by the Government, the Reserve Bank of India (RBI) and the banks to offer banking facilities in these areas, the number has come down to 93 in February 2010.
The government has also made bigger Financial Inclusion Fund (FIF) and the Financial Inclusion Technology Fund by Rs 100 crore each. The fund will be contributed by Government of India, RBI and NABARD.
As per the government sources, factors such as lack of infrastructure, inhospitable terrain, messy laws and low populace has stopped the centre from offering banking facilities in the rural areas. The government has firmly decided upon to extend these benefits to the rural population despite the drawbacks. This in fact will help give a major boost to the rural economy of India.
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