RBI extends lead bank scheme to urban areas in inclusion drive
Mumbai: Stating that there are millions of unbanked people even in urban areas, the Reserve Bank in a significant move has asked banks to bring all districts in metropolitan areas under the lead bank scheme (LBS) fold.
The lead bank scheme, launched way back in 1969, is an integrated mechanism to extend banking services to the doorsteps of consumers, especially the poor.
The move is part of increasing the scope of its financial inclusion drive to urban areas on one hand and helping the government realise its efforts to plug the loopholes in subsidy deliveries by transferring all the benefits directly to the bank accounts of the target people.
Announcing the annual monetary policy, wherein it reduced the rate at which it lends to banks (repo rate) by a token 25 basis points to 7.25 percent, RBI Governor D Subbarao said, the purpose of the LBS extension is to bring all the unbanked urban areas under the banking fold.
"With the objective of providing an institutional mechanism for coordination between government authorities and banks, facilitating doorstep banking to the excluded segment of urban poor, and to implement direct benefit transfer scheme of the government, it has been decided to bring all the districts in metropolitan areas under the LBS fold," he said.
It can be noted that at present, the LBS is applicable only to non-urban districts as of now.
Explaining the rationale for the move, the RBI said: "The challenge of financial exclusion is widespread in metropolitan areas as well, especially amongst the disadvantaged and low-income groups and not just in villages."
To help the government meet its objective of covering the maximum number of people under the ambitious direct benefit transfer (DBT) scheme, the Reserve Bank also asked banks to open the Aadhaar-based bank accounts in camp mode with the help of local government authorities.
Unveiling the annual monetary policy, Subbarao also said: "With a view to facilitate the DBT banks are advised to open accounts for all eligible individuals in camp mode with the support of local government authorities."
Accordingly, the apex bank has also decided to ask banks to seed the existing accounts or the new accounts with the Aadhaar numbers apart from putting in place an effective mechanism to monitor and review the progress in the implementation of DBT which aims at transferring the subsidy to the beneficiaries' bank accounts.
On the success of the financial inclusion plan, the RBI said since April 2010, when the implementation of the financial inclusion plan (FIP) 2010-13 got kicked off, as many as 2 lakh villages came under the banking fold. Still the work is very long as there are more than 4 lakh unbanked villages.
The RBI also asked banks to draw up the next FIP for the period 2013-16 to take financial inclusion to the next stage of providing universal coverage and facilitating electronic benefit transfer (EBT).
It also said to link the financially excluded segment with the banking system, a model for conduct of literacy camps by banks has been designed, detailing the operational modalities to culminate in effective financial access to the excluded.